Bitcoin's historic short squeeze and a macro catalyst sparked by U.S. Treasury Secretary Scott Bessent may be signaling a broader bull-market reset after months of weakness, according to analysts at K33 and Bitwise.
Bitcoin gained 23% over the past week, its strongest one-week return since the post-election rally in November 2024, as activity rebounded across crypto markets. Spot and perpetual futures volumes jumped 188%, while CME volumes rose 152% and its annualized bitcoin futures basis climbed to 11.1%, the highest level since January 2025. Bitcoin exchange-traded products also recorded net inflows of 31,740 BTC, their strongest week since the October 2025 highs, K33 Head of Research Vetle Lunde noted in a new report titled "Altitude sickness can wait."
Much of the initial breakout came from forced buying, Lunde said. A record $1.37 billion in bitcoin shorts were liquidated on Aug. 19, nearly double the previous daily high of $757 million from July 2021, followed by another $739 million on Aug. 21, according to K33 data. The squeeze pushed notional perpetual futures open interest down to 284,000 BTC, its lowest level since May, while funding rates returned to neutral. Lunde noted that major short squeezes have historically occurred during bitcoin bottoming phases as bearish positioning becomes crowded and sell-side exhaustion reaches an extreme.
