Bitcoin Rose 24% but Social Interest Grew Only 6%: What Drove the Rally?

While Bitcoin rose 24 percent in August, social interest increased by only 6 percent; 92 percent of the approximately $2.7 billion in liquidations consisted of the forced closure of short positions opened with the expectation of a decline.

Bitcoin’s price rose 24 percent in August, but this movement was not reflected to the same extent on social media. According to Santiment Intelligence data, social volume increased by only 6 percent. This divergence raises the question of whether the rally was supported by broad-based new buying.

Weighted sentiment remained near zero throughout the month. As the Bitcoin price rose, the general mood of investors did not turn strongly positive. Sentiment turned negative again on August 26, as the price approached higher levels.

Short Liquidations May Have Been a Major Factor in the Bitcoin Rally

Santiment noted that the largest daily move was observed following the U.S. Treasury doubling its bond buybacks and the subsequent record short liquidations of approximately $2.7 billion; 92 percent of the liquidations consisted of short positions. These short positions, opened in anticipation of a decline, were automatically closed due to insufficient margin as the price rose.

Some assets besides Bitcoin also saw strong gains. PUMP gained 111 percent, ENA 87 percent, and ZEC 80 percent. However, the overall picture indicated that the price increase in August did not grow at the same pace as new investor enthusiasm. Part of the rally may have been strengthened by the closing of trades expecting a decline.