Bitcoin's $93M Short Squeeze Hits a Wall: Exhaustion vs. Weak Spot Demand

Short liquidations and funding rates point to seller exhaustion

Bitcoin's setup is straightforward. Over $93 million of bitcoin liquidations were mostly shorts, and perpetual futures funding reached a multi-month positive high. That combination often reflects a crowded bearish trade and can support a squeeze.

But the market has not turned into a clean breakout yet. Perpetual funding and liquidations show leverage dynamics, not confirmed spot demand. In other words, sellers may be tired, but buyers still have not fully taken control.

ETF flows are firmer, but they do not settle the debate

The spot backdrop is improving at the same time leverage looks stretched. U.S. spot bitcoin ETFs have reached $50.16 billion in cumulative net inflows, while August has so far included zero days of net outflows in August 2026. Crypto investment products also posted their first week of positive flows, with $281.8 million in net inflows.

That is the tug-of-war investors are trading. Derivatives data suggests shorts are vulnerable, and ETF flows are no longer weakening. Still, the improvement in spot demand appears gradual rather than decisive. If inflows keep building from the $50.16 billion baseline and price can convert that support into a stronger move, the squeeze could extend. If not, the recent setup may remain more a sign of seller exhaustion than proof of renewed buying strength.