Bitcoin rose to the $64,500 level, and short-position liquidations hit a one-month high.

Cointelegraph, a blockchain media outlet, reported on Aug. 18 that this rebound was driven more by a short squeeze in the derivatives market than by spot buying.

Bitcoin rebounded after the weekly close and rose to the $64,600 range. The intraday gain peaked at about 3 percent. Bitcoin short liquidations totaled 637 BTC on the day, the highest daily reading since July 21.

In terms of market structure, bitcoin was trading near $62,750 just before the rebound. Funding rates began to diverge across exchanges in that zone. Short positions dominated on major crypto platforms including Binance, Bybit, OKX and Deribit, while HTX's funding rate at one point jumped to 0.05 percent.

On-chain analytics firm CryptoQuant pointed to this skew as a direct catalyst. It said crowded short positioning was a key trigger and the short squeeze pushed prices higher. Funding rates are the costs derivatives-market participants pay between long and short positions to keep positions open, and wider differences across exchanges are interpreted as an expansion of position imbalances.

Some also said it was too early to view the sharp jump as a trend reversal. CryptoQuant described the move as a "low-volume liquidity trap". It said that because prices spiked quickly as shorts crowded in while volume was insufficient, the upswing may not last long without support from spot demand.

A lack of spot demand was cited as a key constraint in the market. At current levels, the futures market accounts for most trading volume, and spot investors are generally not moving aggressively. Inflows into spot bitcoin exchange-traded funds are also not clear. As a result, even if the price rebound continues, momentum to break above the upper range could be limited without accompanying inflows.

Downside risks were also outlined. CryptoQuant said, "If bitcoin is pushed back below $60,000 and exchange inflows increase again, downside risk toward $50,000 could grow," adding, "Selling pressure has eased, but demand still needs to rise." It warned that if the price loses support while exchange deposits increase, the amount of supply waiting to be sold could grow.

Another factor behind the current range was identified as recent buyers' loss zone. The average purchase price for short-term holders who have held UTXOs (unspent transaction outputs) for less than 155 days is around $68,700, and that level is acting as resistance in the current market. That is because short-term holders in loss may still sell into rebounds.

As a result, the market's next points to watch narrow to two. One is whether another short squeeze emerges as short positions rise across exchanges and funding rates fall again. The other is whether inflows into bitcoin ETFs and spot buying actually recover. A short-term spike alone makes it difficult to confirm a shift in direction, and a recovery in spot demand would be needed to test the durability of the current rebound.