Bitcoin fell below $78,000, and bulls suffered a heavy blow by $270 million

Bitcoin fell below US$78,000, and long liquidations surged.

After the market reversed above US$81,000, the price of Bitcoin fell below US$78,000, triggering a wave of long liquidations. Traders take profits and the bullish leveraged position is released. However, the U.S. spot Bitcoin ETF showed strong net inflows, indicating that potential demand has not disappeared.

Quick overview of key points

Bitcoin fell 4.1% from US$81,238 to US$77,870, before recovering to around US$78,000. Long positions accounted for approximately $270 million of the market's total clearing of $324.4 million. Open interest in Bitcoin futures is down 4.5% from levels near recent price peaks. The U.S. spot Bitcoin ETF achieved net inflows for seven consecutive trading days, with a cumulative inflow of US$2.57 billion.

Bitcoin's price fell back after breaking through US$81,000

Bitcoin's correction was due to traders taking profits and increasing leveraged long positions after the short squeeze last week pushed the price to exceed US$80,000. Bitcoin hit $81,238 on Tuesday after breaking through a consolidation range that has been in about ten weeks. The price was about 29.5% higher than the range low before sellers emerged near the May high. The price then fell to $77,870, down about 4.1% from its high. Bitcoin has since recovered to around $78,000, close to the lower edge of the short-term range identified by analysts.

The reversal was not accompanied by a clear news catalyst. Conversely, clearing and open interest data suggest a reset in derivatives markets after traders increased their bullish exposure during the breakout period. Data shows that in the past 24 hours, the overall clearing amount of the cryptocurrency market reached US$324.4 million, of which long positions accounted for approximately US$270 million, accounting for 83%. Long Bitcoin positions contributed approximately $109 million in losses. The single largest liquidation occurred on the Binance platform, involving a Bitcoin position worth US$11.91 million.

Open interest contracts fell, leveraged long exits

Open interest contracts in Bitcoin futures fell to US$54.79 billion, down 1.5% from the previous US$55.64 billion. Currently open interest has fallen by approximately 4.5% from the US$57.38 billion recorded by Bitcoin near its peak of US$81,238. The combination of falling prices and fewer open interest contracts confirms that leveraged long positions are being closed or liquidated rather than being replaced by aggressive growth in short positions. Data shows that Bitcoin futures trading volume was US$68.81 billion, and spot trading volume was US$4.94 billion. Prior to the decline, funding rates on multiple exchanges were positive, indicating that derivatives market positions had tilted towards bullish traders.

Analysts pointed out that the initial short squeeze has basically ended and spot buyers are now needed to push the rally to continue. "The short squeeze is over and spot demand must now lead rather than follow leverage," analysts said. Despite the recent volatility, open interest contracts and funding rates remain restrained in his view. This restraint will reduce the risk of another large-scale liquidation-driven reversal, but these two indicators will still need to be watched closely if Bitcoin attempts to rise above $80,000.

U.S. Bitcoin ETF inflows support spot demand

Data shows that the U.S. spot Bitcoin ETF recorded a net inflow of US$314.3 million on August 25. BlackRock's IBIT fund led the way with inflows of $284.4 million. Net inflows for seven consecutive trading days brought the cumulative inflows to approximately US$2.57 billion. Analysts pointed out that this represented solid spot demand rather than a rise mainly sustained by speculative leverage. Analysts also estimated inflows of around $1.9 billion this week and called it the strongest weekly inflow since 2026.

report also showed that during the overall market rally, 19 of the 20 largest altcoins rose by more than 12%. Zcash rose 50.9%, Aave rose 44.7%, XRP rose 43.3%, and Hyperliquid's HYPE token rose 36.2% to a record high. The total market value of altcoins excluding Bitcoin and Ethereum rose 21% to $791.5 billion. The analysis also pointed out that holders who bought Bitcoin 155 to 300 days ago have shifted from losing money to selling at a profit, which has put upper supply pressure on ETFs and other spot buyers.

Bitcoin needs to recover US$80,000 to repair its breakthrough pattern

Analysts predict that Bitcoin may consolidate between US$77,100 and US$80,000 before determining the next step. "We are currently seeing a short squeeze that encounters a clear group of sellers, but there are real buying orders underneath it," analysts said. "This leads us to believe that there may be a lower time frame range or a continuation of the market." The immediate support area is between $77,800 and $78,000, where buyers have responded during the recent decline. Continued breaks below the zone could expose a range of $76,500 to $77,000, followed by $75,700 to $76,000.

If Bitcoin prices fall below US$72,500 to US$73,000, its broader recovery will face a more severe test. Analysts view the 200-day moving average of around $69,000 to $70,000 as the main medium-term support, after Bitcoin broke through the average for the first time since November 2025. On the upside, Bitcoin must recover the $79,200 to $80,000 area to weaken the structure of failed breakthroughs. A closing price above $81,100 to $81,250 would provide stronger confirmation that buyers have regained control of the situation. Analysts see near the May high of $82,000 as the next hurdle. He believes that continued ETF demand may support prices moving towards the $85,000 to $90,000 range, as the sustainability of the rally will depend on the source of demand.

Policies and U.S. bond yields are still risk factors for Bitcoin

U.S. policies and treasury bond market conditions may affect whether institutional demand continues. Analysts described the September 15 CLARITY bill vote as an active risk for Bitcoin, rather than just a potential positive catalyst. He also pointed out that the 30-year U.S. bond yield has rebounded to 5.27% after reversing an earlier decline. Higher long-term yields could tighten the financial environment and reduce demand for risky assets, including cryptocurrencies. Therefore, Bitcoin's next move depends on whether ETFs and other spot demand can absorb profit-taking without increasing leverage. Continued inflows may support another attempt to hit $81,000, while losing $77,100 shifts attention to lower support and the strength of U.S. institutional capital flows.