Bitcoin and Ethereum Short Squeezes: Strategic Long-Position Entry Points in a Bullish Crypto Cycle

The cryptocurrency market in late August 2025 is witnessing a seismic shift as Bitcoin (BTC) and Ethereum (ETH) experience historic short liquidation volumes and positioning imbalances. These dynamics are creating a high-probability bullish reversal, offering strategic entry points for long-position investors. By analyzing market sentiment, technical indicators, and institutional flows, we can identify optimal opportunities to capitalize on the unfolding short squeeze.

Bitcoin: A Structural Short Squeeze in Motion

Bitcoin's price action in late August has been nothing short of explosive. On August 9, BTC surged past $122,000, triggering $30 million in short liquidations within a single hour. By August 13, total crypto short liquidations exceeded $500 million, with Bitcoin alone wiping out 92.55% of its short positions in 24 hours. A 10% rise from current levels could unleash nearly $18 billion in short liquidations, reinforcing a self-sustaining bullish cycle.

Positioning data reveals a critical imbalance: Bitcoin's derivatives market is heavily bearish, with large open short positions vulnerable to rapid upward moves. Key technical levels, such as the $114,000–$115,000 CME gap fill and the 1.618 Fibonacci extension at $131,000, are now pivotal. The RSI at 63 and the 20-day moving average at $120,000 suggest accumulation mode, with overbought conditions not yet reached. This indicates structural momentum rather than a peak.

Institutional demand is a key catalyst. Harvard University's $116.6 million investment in BlackRock's IBIT ETF and MicroStrategy's continued BTC treasury additions reflect growing confidence. Regulatory tailwinds, including the U.S. SEC's staking rules and crypto inclusion in 401(k)s, further strengthen the bullish case.

Ethereum: A Short Squeeze Amplified by Institutional Adoption

Ethereum's short squeeze is equally compelling. By August 13, ETH surged past $4,000 for the first time since December 2024, peaking at $4,237 and liquidating $135 million in short positions. A $34 million liquidation on Binance alone highlighted the intensity of the squeeze. Positioning data shows a long-to-short ratio of 29,307 to 14,332, with open interest on Binance exceeding $10.35 billion.

Institutional inflows into Ethereum ETFs, such as BlackRock's ETHA and Fidelity's FETH, added $1.0188 billion in a single day. On-chain activity, including a 5,000 ETH ($20.91 million) deposit into Binance by the Metalpha-linked wallet, signals strong institutional inflows. Technically, ETH remains above the 20-day moving average ($4,243) and the upper Bollinger Band ($4,260), with RSI at 70.57 indicating overbought conditions.

Strategic Entry Points and Risk Management

For Bitcoin, re-entry below $115,700—a critical support level—presents a favorable opportunity, with a target at $131,000. Long-term investors should consider dollar-cost averaging into spot ETFs like IBIT to mitigate volatility. For Ethereum, a retest of $4,200 could flip into new support, with a target at $5,000. Position sizing must prioritize liquidity and risk management, given the market's volatility.

The Bitcoin Futures Power Index, now in neutral territory, suggests a potential cooldown. However, the “Power of 3” pattern—accumulation, manipulation, and distribution—indicates a $126,000 target if key levels are retested. Binance's net taker volume dropping below -$1.5 billion and negative funding rates across major platforms signal bearish exhaustion, increasing the likelihood of a bullish reversal.

Conclusion: A New Bull Phase in Crypto

The confluence of record short liquidations, institutional adoption, and regulatory clarity points to a sustained bull trend. Bitcoin and Ethereum are entering a new phase where structural forces—regulatory clarity, macroeconomic tailwinds, and exhausted bearish positioning—favor continued upward momentum. Investors should prioritize strategic entry points, leverage ETFs for exposure, and monitor key technical levels to capitalize on the unfolding short squeeze.