Bitcoin's August rally has hit a rough patch, with the cryptocurrency slipping below $79,000 on Tuesday after a rejection at $81,000 extended into a second day of selling. At the time of writing, BTC was trading near $78,700, down about 0.4% over the past 24 hours, though its seven-day gain remained close to 13.8%.
The pullback began after Bitcoin touched an intraday high of $81,265 on Aug. 25, just below its 50-week moving average near $81,085. That level, combined with a resistance zone extending toward the May swing high around $82,800, has proven difficult to overcome. The rapid ascent—which saw BTC surge more than 23% in a week—left traders holding substantial short-term profits, prompting profit-taking as momentum stalled.
The rally had been fueled by a weaker U.S. dollar and demand tied to concerns over currency debasement, but it also left the market vulnerable to a leverage unwind. According to Glassnode, Aug. 19 saw the largest single-day Bitcoin short liquidation event since 2019, with shorts accounting for roughly 85% of liquidations. As those positions were cleared, one source of buying pressure diminished, and leverage began to work in the opposite direction as traders opened long positions during the climb.
When Bitcoin failed to hold $80,000, long liquidations added to spot selling. One liquidation window wiped out roughly $324 million in crypto positions, including close to $270 million in longs. By Aug. 26, derivatives positioning had weakened further, with shorts accounting for about 51.6% of taker volume and Bitcoin futures open interest dropping below 700,000 BTC.
CryptoQuant has flagged elevated unrealized profits and increased exchange inflows following the rally, leaving more coins available to be sold if holders decide to take profits. At the same time, the firm noted that its Bitcoin Bull Score jumped from 30 to 80 in a week, with eight of its 10 tracked metrics turning bullish and spot demand expanding at its fastest monthly pace since late December.
Spot ETF demand has provided a counterweight to the selling. U.S. spot Bitcoin ETFs recorded $314.37 million in net inflows on Aug. 25, according to SoSoValue data, extending their run to seven consecutive sessions. BlackRock's IBIT accounted for $284.42 million of the day's total, with no fund recording a net outflow.
Traders are now looking toward Aug. 28, when around 81,700 Bitcoin options worth $6.44 billion are scheduled to expire on Deribit at 08:00 UTC. According to market reports, the $75,000 strike holds $236 million in call open interest, while another $157 million sits at $80,000. More than $500 million in notional value is positioned within 5% of BTC's current price, which Deribit chief risk officer Shaun Fernando said could increase gamma hedging into the expiry.
Technical picture: momentum stretched
Bitcoin's daily chart still carries a bullish trend structure despite the two-day pullback, but momentum indicators show the rally has become stretched after the rapid move from the mid-$60,000 range. BTC is trading near $78,650 and remains well above all four exponential moving averages on the daily chart. The 20-day EMA stands near $71,865, the 200-day EMA near $71,974, while the 50-day and 100-day EMAs sit around $68,147 and $68,057, respectively.
The distance between price and the moving averages underscores how quickly BTC moved higher during the August breakout. The $71,800-$72,000 area now forms the closest major EMA cluster if the current pullback develops into a deeper correction, while the 50-day and 100-day averages create another technical area around $68,000.
The daily Relative Strength Index is at 78.67, above the conventional 70 overbought threshold, after surging from around 50 during the breakout. While this does not by itself confirm a top, it leaves the price more exposed to profit-taking. MACD continues to favor buyers, with the MACD line around 4,030 compared with the signal line near 2,820 and the histogram still positive at roughly 1,210. However, the latest histogram bars have started to contract, showing that bullish momentum is losing some strength even though a bearish crossover has not formed.
Volume profile data places a large concentration of previous trading activity around the mid-$60,000 to upper-$60,000 range, including a prominent high-volume area close to $67,500. Bitcoin moved quickly through the thinner volume area above that region during its August breakout, leaving less historical trading activity between the current price and the previous consolidation zone.
Key levels to watch
The 24-hour liquidation heatmap adds much tighter levels for the next move. A dense pool of liquidation leverage sits around $79,200-$79,500, with further liquidity extending towards $80,000-$80,500. A move through the first cluster could bring the $80,000 level back into play, before BTC again faces the $81,000-$83,000 resistance zone that stopped the latest rally.
Below the market, another concentrated liquidation area sits around $77,900-$78,100. BTC has already traded close to that zone during the latest decline, while additional liquidity is distributed through roughly $77,000-$77,700. A sustained break below the lower cluster would put $75,000 back in focus, a level that also carries the largest call open interest.
For context, Bitcoin's recent strength has been supported by ETF inflows and broader liquidity conditions, but the current pullback highlights the fragility of leverage-driven moves. Meanwhile, Ethereum's rally has also shown signs of strain, and XRP's drop underscores the broader risk of leveraged long unwinds across the crypto market.
This article is for informational purposes only and does not constitute financial advice.
