A massive short squeeze wiped out over $1 billion in crypto short positions as Bitcoin (BTC) price surged to new all-time highs, catching bearish traders off guard and fueling a broader rally in the crypto market.
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Around 232,000 traders saw their positions wiped out over the past 24 hours as more than $1.1 billion in crypto shorts were liquidated, including $635 million in Bitcoin and $209 million in Ether.
According to crypto analysts, a massive short squeeze in Bitcoin and Ether triggered a sharp shift in market sentiment, propelling Bitcoin to a record high of $118,400 early Friday and pushing Ether above the $3,000 mark. The total cryptocurrency market capitalization climbed 5.2% to $3.65 trillion.
A short squeeze typically happens when short sellers are forced to buy back their positions as the price unexpectedly rises. This adds buying pressure, pushing prices even higher. More liquidations follow, fueling a fast, self-reinforcing price surge.
What Triggered the Short Squeeze?
The latest Bitcoin rally may have deeper roots than just a short squeeze.
According to CryptoQuant, daily Bitcoin exchange inflows fell to just 18,000 BTC on Thursday, the lowest level since April 2015, signaling weak selling pressure. Ether saw a similar trend, with daily inflows to exchanges hitting their lowest point since October 2024.
At the same time, CryptoQuant analyst CryptoDan pointed to a significant buy move from a major whale on Binance as a key driver of Bitcoin’s price surge.
The timing of the move, just as Bitcoin broke its all-time high, suggests that “whales intended to drive the market even higher,” he said.
What’s Next?
However, CoinGlass data shows that despite a dramatic price breakout, funding rates stayed modest.
They hover near neutral levels, around 0.01%, suggesting that the market hasn’t overheated, as there is no excessive long exposure yet.
In simple terms, traders are not aggressively chasing the price, which lowers the risk of an immediate correction and leaves room for further upside if long positions begin to build following the breakout.
Why This Matters
The $1 billion short squeeze highlights the intense volatility and rapid price fluctuations that can significantly impact the crypto market in a matter of hours.
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People Also Ask:
Not necessarily. While ATHs can signal strong momentum, markets can also experience corrections or pullbacks after reaching new highs.
A short squeeze occurs when many traders betting against Bitcoin (short sellers) are forced to buy back their positions as the price rises, pushing the price even higher rapidly.
Open interest refers to the total number of active derivative contracts (like futures or perpetual swaps) that have not yet been settled.
Changes in open interest can indicate how much market participation there is and whether traders are opening new positions or closing existing ones, helping gauge market sentiment and potential price trends.
Yes, if open interest is high and price starts rising sharply, short sellers may be forced to cover their positions, triggering a short squeeze.
