After a bullish August rally, Bitcoin is entering September with momentum—and growing uncertainty over whether its gains can continue.
According to CoinGlass data, Bitcoin is set to close August with a return of more than 24%, its strongest monthly performance since the 2017 cycle. The rally also triggered a major short squeeze across the derivatives market, forcing bearish traders to liquidate their positions.
More than $9.71 billion has been liquidated from the cryptocurrency market over the past two weeks, including $6.55 billion in short positions and $3.16 billion in long positions. Shorts represented roughly two-thirds of total liquidations, showing that bearish traders were heavily squeezed as Bitcoin moved higher.
Source: X
Bitcoin funding rates rise as traders assess the next move
The key question now is where Bitcoin ($BTC) is headed next.
Data from CryptoQuant suggests that market participants remain bullish. Bitcoin’s funding rates on Binance increased by more than 42% in less than a week, even as $BTC consolidated below the $80,000 level.
With many leveraged positions liquidated, the market has undergone a reset that could leave room for another move higher. However, on-chain data may be pointing to a different explanation for Bitcoin’s latest advance.
The rally may have resulted from the unwinding of excessive leverage rather than fresh spot demand. If that is the case, the move could prove to be a short-term relief rally and set the stage for a more bearish September.
Bitcoin faces $9 billion in liquidations and weakening demand
A sustained breakout above resistance requires strong investor conviction. Yet that conviction appears to be fading as the market approaches September.
According to SoSoValue, Bitcoin exchange-traded funds recorded more than $201 million in net outflows on August 28, ending a nine-day streak of inflows.
Another trend in the current market cycle could also affect Bitcoin’s momentum. As the chart below shows, smaller holders accumulated Bitcoin as its price fell below $67,000. Wallets holding fewer than 100 $BTC recorded heavy gross inflows.
However, short-term holders are often among the first market participants to take profits when sentiment turns risk-off or Bitcoin fails to break through key resistance. That behavior could increase selling pressure around the $80,000 level.
Source: Glassnode
Ethereum-Bitcoin ratio adds to September uncertainty
Technical factors are adding to the risks facing Bitcoin. The $ETH/$BTC ratio is currently at a key breakout level, with analysts anticipating a major move.
At the same time, weakening Bitcoin spot demand, rising short-term holder supply and increasingly bearish sentiment have made the asset’s setup less convincing. If $ETH/$BTC breaks higher while Bitcoin struggles, it could indicate that capital is rotating away from Bitcoin and place additional pressure on the September outlook.
Against this backdrop, Bitcoin’s late-August rally may fail to deliver on its bullish promise. The more than $9 billion in crypto liquidations are central to that concern: because most of the liquidations came from short positions, the recent advance may have been driven primarily by a short squeeze rather than strong underlying buying.
If that interpretation is correct, Bitcoin’s latest rally could lose momentum and leave the cryptocurrency market facing a bearish September.
