Bitcoin has turned itself around with a sharp surge to $92,000, unleashing a fresh wave of short liquidations on the derivatives exchanges.
Bitcoin Has Seen A Flash Recovery Back To $92,000
Bitcoin suffered a blow on Monday as its price slipped under $84,000, but just as quickly as it had crashed, the cryptocurrency has made a swift recovery on Tuesday.
With the asset’s price now floating above $92,000, its price has surged by more than 8% over the last 24 hours.
Like is usually the case, Bitcoin hasn’t been alone in this rally; the rest of the cryptocurrency market has also shot up alongside the number one digital asset. Some of the top altcoins have even managed to outperform BTC, with Ethereum (ETH) sitting in a profit of nearly 10% for the past day.
The fresh wave of volatility in the sector has triggered a liquidation squeeze in the derivatives market.
Crypto Liquidations Have Crossed $400 Million In Last 24 Hours
According to data from CoinGlass, the cryptocurrency market as a whole has suffered over $410 million in liquidations during the past day. “Liquidation” here naturally refers to the forceful closure that any contract undergoes after it has amassed a certain percentage of loss (as defined by the platform).
Considering that the price action in this window was majorly to the upside, it’s not surprising to see that short contracts made up for most of the derivatives flush.
As is visible in the above table, $348 million in short positions found liquidation in the last 24 hours, equivalent to about 85% of the total flush.
In terms of the individual symbols, Bitcoin, Ethereum, and Solana were the top three contributors to the liquidation event with $196 million, $95 million, and $18 million in positions, respectively.
Just $13 million of the Bitcoin liquidations involved long investors; the rest $182 million in liquidations struck the traders betting on a bearish outcome for the cryptocurrency.
A mass liquidation event like this latest one is popularly known as a squeeze. Today’s squeeze involved shorts in an extreme majority, so the event will be termed a short squeeze.
During a squeeze, a sharp swing in the price triggers a large derivatives flush, which only ends up feeding back into the price move. The amplified price swing then unleashes a further cascade of liquidations.
Such events aren’t a particularly rare sight in the cryptocurrency market, as assets tend to be volatile and many traders opt for significant amounts of leverage.