Bitcoin's 24.95 percent price increase in August, its strongest month since November 2024, occurred while coin-denominated perpetual open interest declined 8.5 percent. This divergence suggests the rally was driven by spot buying and short liquidations rather than an expansion of leveraged positions.
DefiLlama Research reported that BTC-denominated open interest stood at about 312,000 BTC by late August, down from about 341,000 BTC before the price breakout. This indicates existing positions closed, and traders did not add fresh exposure in Bitcoin terms.
The decline in Bitcoin-denominated futures open interest reached a five-month low, standing at 587,600 BTC as of Aug. 25. This figure is down from 645,800 BTC on Aug. 14, according to data from KuCoin Flash.
Market-wide futures open interest, also measured in coin terms, contracted by 3.9 percent. It fell from about 737,000 BTC on Aug. 13 to about 708,000 BTC on Aug. 25, while the price rose 24.3 percent over the same period, as reported by Oracle of BTC.
Investing.com said the five-month low in Bitcoin-denominated futures open interest was evidence that short liquidations and position closures supplied the buying pressure, rather than an influx of new long capital. This dynamic makes the rally less susceptible to sudden leverage-induced flushes.
Dollar-denominated perpetual open interest, however, did rise during August. It climbed from about $21.9 billion before the breakout to nearly $26 billion before Aug. 24. This increase is consistent with Bitcoin's higher price, where a smaller amount of BTC-denominated exposure can carry a larger dollar value.
DefiLlama highlighted this divergence, noting that open interest increased in dollar terms while falling in Bitcoin terms. This confirms the dollar value rise was primarily a function of price appreciation.
Santiment reported that coin-denominated open interest fell about 11 percent to about 312,600 BTC. This reinforces that the August rally was not fueled by an expansion of leveraged positions.
OKX said market makers viewed the rally as a short-term liquidity liquidation event. Near-term option volatility jumped 80 percent, but three-month and six-month distant options remained unchanged, suggesting a contained market reaction to the price surge.
Analysts are now monitoring whether spot demand can sustain Bitcoin's move above key resistance levels. The current rally, bought rather than leverage-driven, suggests a more stable advance, provided underlying demand persists.
