Bitcoin dropped more than 6% in a rapid sell-off this week that liquidated $500 million in long positions within 30 minutes, yet the coin still closed the week up more than 21%. Bitcoin ETFs logged their largest daily inflow of the month days before the drop, and traders have squeezed more than $5 billion in short positions during August.
Bitcoin rose more than 25% this week, with its highest wick nearly touching $80,000, before it suddenly pulled back more than 6% in what the broader market is calling the biggest crypto flash crash since October 10, 2025. The sell-off liquidated $500 million in long positions within 30 minutes.
A correction inside an uptrend
Bitcoin crashed more than 6.5% at the start of October, but this week's pullback looks different. The coin held onto its weekly gains and remains up more than 21%, making the move look more like a typical correction inside a healthy weekly uptrend rather than the start of a Q4-style crash.
ETF inflows point to steady demand
Bitcoin ETFs recorded $507 million in inflows on August 19, their biggest daily inflow since the first week of May, according to data from SoSoValue. IBIT, the largest Bitcoin ETF, led demand with $285 million of inflows, or 56% of the total, making it the most popular fund among investors. IBIT has posted $1.2 billion in inflows this month, putting it on pace for its best month since May.
Short squeeze bets build
A similar situation occurred previously, triggered by the largest ever long liquidation in the crypto market, which ultimately precipitated a bear phase for Bitcoin. This time, traders have squeezed more than $5 billion in shorts during August, marking the strongest liquidation cascade since October 10's $16.78 billion. The market is now debating whether the crypto cycle has entered a new bullish phase and the biggest short squeeze in history is underway, a scenario that is highly unlikely to be ruled out.
In this reading, deleveraging looks like a buying opportunity rather than a distribution event, and the $5 billion short squeeze so far may be only the beginning.
Source: AMBCrypto
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