Bitcoin rose 23% over the past week, and K33 says the move marks a reset in the bull market rather than a simple rebound after months of weakness.
In an Aug. 26 report titled Altitude Sickness Can Wait, K33 head of research Vetle Lunde argued that the rally was driven by two forces: an aggressive short squeeze in crypto derivatives and a macro shift tied to U.S. Treasury policy. The Block first reported on the analysis, which also cited comments from Bitwise.
Short liquidations reshaped the derivatives market
K33 said Bitcoin shorts worth $1.37 billion were liquidated across the market on Aug. 19. The firm said that figure was nearly double the previous record set in July 2021. Two days later, on Aug. 21, another roughly $739 million in Bitcoin short positions were wiped out.
After that round of forced buying, K33 said market structure looked healthier. Perpetual futures open interest fell to about 284,000 BTC, the lowest level since May, while funding rates moved back to neutral.
Options data also shifted. K33 said six-month Bitcoin options skew turned negative for the first time since September 2025, a sign that call demand had moved ahead of put demand. In spot ETFs, net inflows reached 31,740 BTC, the strongest weekly result since October 2025.
Treasury buybacks added a macro tailwind
K33 also tied Bitcoin’s advance to action from U.S. Treasury Secretary Scott Bessent, who has pushed to expand long-dated Treasury buybacks. The size of the program increased from about $2 billion to at least $4 billion, according to the report.
Market participants interpreted the move as an effort to suppress long-end yields. K33 said that, in turn, raised concerns around dollar dilution and fiscal pressure, making scarce assets such as gold and Bitcoin more attractive.
Under that backdrop, Bitcoin’s 90-day correlation with gold climbed to 0.52, the highest level since October 2020. Its correlation with the Nasdaq fell to 0.38, a one-year low. Lunde said the combination of stronger alignment with gold and weaker linkage to tech stocks was a very positive signal.
Bitwise points to Bitcoin’s two-part macro case
Bitwise chief investment officer Matt Hougan offered a broader macro reading of the same policy shift. He said the U.S. economic offensive against Iranian global financial flows strengthened two core Bitcoin narratives at the same time: Bitcoin as a scarce asset that can hedge inflation, and Bitcoin as a neutral monetary network that does not sit under the control of any single national system.
Hougan said that as financial infrastructure becomes more exposed to geopolitical pressure, Bitcoin’s role in transferring value globally could become more visible.
Focus turns to spot demand and ETF flows
With internal market positioning reset and macro catalysts now in play, the analysts cited in the report said the rally should not be treated as a one-day move. Even after the recent jump, Bitcoin remains about 36% below its all-time high.
K33 said the next question is whether spot demand and ETF inflows can absorb profit-taking pressure. That is the condition the firm highlighted for the uptrend to continue.