short squeeze

Goldman Sachs warns that short covering, not genuine buying, is driving the current rally in thin summer conditions, leaving markets vulnerable to sharp reversals.

Trend-following funds flipped from short to long after gold broke key technical levels, forcing speculative capital to chase higher or risk being left behind.

BTC hit a three-month high of $79,500 on Aug. 21 before retreating to $77,230, with spot ETF inflows of $517 million in a single day and forced short closures driving a 24 percent two-day move.

A two-day rally wiped out over $4 billion in short positions, with Bitcoin hitting $70K for the first time since June and Ethereum leading gains on spot ETF demand and Treasury liquidity.

Bitcoin's best daily performance since February 2026 forced underwater short sellers to cover positions, triggering a self-reinforcing rally that caught retail demand at a two-year high.