Recent data indicates significant liquidation of short contracts in cryptocurrency derivatives, triggered by Bitcoin’s surge above $66,000.
Surge in Bitcoin Leads to Substantial Derivatives Liquidations
An analysis from CoinGlass reveals a notable increase in liquidations across the cryptocurrency market in the past 24 hours.
The term “liquidation” refers to the forced closure of contracts that have incurred substantial losses. The table below displays the total liquidation amount recorded during this period.
Over $135 million in cryptocurrency derivatives contracts held by more than 52,000 traders were liquidated, with short positions accounting for $93 million. Shorts made up 68.4% of the liquidations due to recent bullish market performances.
Despite a positive market trend, long contracts worth over $42 million were also liquidated, suggesting overleveraged positions entered the market late and encountered liquidation as the uptrend subsided.
Bitcoin-related contracts, as illustrated in the heatmap below, played a significant role in the liquidation event.
Bitcoin’s liquidations amounted to $47 million, surpassing Ethereum’s $16 million and Solana’s $12 million, indicating decreased speculation around ETH in recent times.
The significant liquidation event witnessed is commonly referred to as a “squeeze,” where a price swing triggers a series of liquidations, creating a chain reaction that influences market movements.
Given the dominance of short liquidations, this event can be classified as a short squeeze, a recurring phenomenon in the volatile cryptocurrency market.
Prior indications of liquidations emerged at the start of the surge, as observed through the rise in Bitcoin futures Open Interest, suggesting heightened speculative activity.
The sustained high Open Interest post-surge indicates ongoing speculation despite the recent squeeze event.
Bitcoin Price
Presently, Bitcoin is trading around $66,000, marking an 8% increase over the last week.
