Data shows that a large number of Bitcoin short positions have been liquidated following the cryptocurrency’s rise to the $79,000 level.
Bitcoin has surpassed $79,000 for the first time since early February
Bitcoin has seen a continuation of its recent bullish momentum over the past day as the price has reached the $79,300 level after a nearly 5% jump. The chart below shows what the cryptocurrency’s recent trajectory has looked like.
Bitcoin also attempted a recovery last week, but that momentum ultimately spiraled out of control as its value approached the $78,000 level. This new surge has pushed the cryptocurrency above this level, to levels not seen since the first few days of February.
Since the rally came into focus, it has unleashed a wave of chaos on the derivatives side of the industry.
A large number of BTC liquidations have piled up on the exchanges
According to data from MintGlassBitcoin has seen a notable number of liquidations due to the volatility over the past 24 hours. ‘Liquidation’ here refers to the forceful closing that any open contract undergoes after incurring losses to some extent.
Below is a heatmap showing how daily liquidations compare across the different assets in the sector.
It appears that Bitcoin, as usual, has been the largest contributor to liquidations in the market, with over $222 million in positions related to asset flushes over the past day. About $205 million of these positions were short positions, meaning bearish bets made up for most of the liquidations.
The fact that Shorts are the worst hit side is of course due to the fact that the cryptocurrency has seen a sharp increase within this window. Ethereum, which has seen the second largest derivatives boom, also saw the shorts make up $99 million of the $115 million in total liquidations.
In total, the digital asset sector as a whole has witnessed nearly $449 million in liquidations in the past 24 hours.
The table shows that $365 million, or more than 80% of these liquidations, involved short positions, reinforcing the bullish wave that the sector as a whole has seen during this period.
A mass liquidation like today’s is colloquially known as a squeeze. Since the last event primarily involved shorts, it would be called a short squeeze. Generally, these events occur after a sharp price swing triggers an initial wave of liquidations. This flush then feeds back into the move, causing even more liquidations in the market.
In the cryptocurrency sector, these events are not exactly a rare phenomenon due to the volatility that coins typically exhibit in regular use and the use of leverage, which is widespread among derivatives traders.