Bitcoin Rallies 35% From August Lows as Open Interest Declines

Bitcoin has climbed 35% since its August low, a move that has occurred alongside a notable contraction in the derivatives market. According to Glassnode, BTC-denominated open interest has fallen nearly 20% to levels not seen since March.

This divergence between rising prices and declining leverage suggests that the current rally is being fueled by spot buyers and ETF inflows rather than speculative derivatives positioning. The decline in open interest accelerated following a record short liquidation event on August 19, where 85% of all liquidations involved traders betting against Bitcoin.

In the immediate aftermath of that event, open interest dropped 11% in coin-denominated terms. Bitcoin subsequently rose roughly 26% during the initial phase of the recovery, eventually reaching a total gain of 35% by late September, where it traded in the $83,000 to $84,000 range.

Glassnode noted that this trend reflects a maturing market structure. Spot demand has been a key factor, with US spot Bitcoin ETFs recording $2.23 billion in inflows during a seven-day period in August.

Looking ahead, on-chain data points to a supply cluster between $84,000 and $86,000. This zone is composed primarily of coins held by long-term holders, and Bitcoin has been testing the lower edge of this range as it trades near $83,000 to $84,000.