Bitcoin survives a $500M flush – Is a historic short squeeze next?

The last 24 hours were probably the most volatile.

Technically, Bitcoin rose more than 25% this week, and its highest wick nearly touched the $80k level. But BTC suddenly pulled back more than 6%, marking what the broader market is calling the biggest crypto “flash crash” since the 10th of October, 2025.

The result? $108 billion in shorts was liquidated within six minutes, and $500 million in longs within 30 minutes. 

But was this the beginning of the Q4-style crash? As the chart below shows, BTC crashed 6.5%+ at the beginning of October. Meanwhile, this week BTC managed to hold its weekly gains, and it is still up 21%+.

Therefore, so far, it looks more like a typical correction, which occurred within a healthy weekly uptrend.

Notably, there was a significant signal from Bitcoin [BTC] ETFs as they recorded their highest inflows day on record this month. 

According to the data from SoSoValue, Bitcoin ETFs had $507 million in inflows on the 19th of August, their biggest daily inflow since the first week of May. The largest Bitcoin ETF, IBIT, led the demand with $285 million worth of inflows, of which IBIT attracted 56%, making it most popular among investors.

IBIT has so far posted $1.2 billion in inflows this month, suggesting that it could have the best month of inflows since May.

In short, the bears may have less and less influence on the price as the bulls are accumulating. Meanwhile, the market is wondering whether the crypto cycle has entered a new bullish phase and the biggest short squeeze in history is underway, which is highly unlikely to be ruled out.

Bitcoin’s resilience sparks bear trap bets

A major flash crash occurred, liquidating a long position worth $500 million in BTC within six minutes.

However, BTC is resilient, and history has shown that a short squeeze during a leveraged accumulation period could be a positive sign for the asset.

In addition, the inflow of ETFs, if it persists, along with the liquidation of longs and massive buying, will create excellent conditions for growth.

It is noteworthy that a similar situation occurred previously, triggered by the largest ever “long” liquidation in the crypto market. Fast forward to now, over $5 billion in shorts have been squeezed so far in August, marking the strongest liquidation cascade since October 10’s $16.78 billion.

This event ultimately precipitated the bear phase for Bitcoin. However, some analysts postulate that the current short liquidation on an unprecedented scale might propel BTC into a new bull run.

With technical resilience, strong ETF inflows, and heavy deleveraging, the bullish case looks convincing enough.

The scenario is simple: Bitcoin’s recovery from the “flash crash” is better than what the market had seen before in October, and “institutions’ positioning” is also supportive of a bullish scenario.

In this context, deleveraging appears to be a buying opportunity, not a distribution channel.

This, in turn, suggests that the $5 billion short squeeze so far is only the beginning of the largest short squeeze in crypto history.

Final Summary

• Bitcoin is still up 21%+ this week despite the flash crash.  Meanwhile, strong ETF inflows show buyers are still active.
• Traders have squeezed more than $5 billion in shorts in August, which could set BTC up for an even bigger move higher.