Data shows that the cryptocurrency derivatives market saw significant liquidations following Bitcoin’s surge above the $63,000 mark.
Bitcoin’s rally has led to short liquidations in the derivatives market
According to data from CoinGlassthe latest volatility in the cryptocurrency market has led to massive liquidations on the derivatives side.”Sale off” here naturally refers to the process any open contract goes through, when its platform forcibly closes it after accumulating losses of a certain degree.
The table below shows how derivatives settlements were in the last 24 hours:
It appears that the cryptocurrency derivatives market has seen total liquidations of $126 million over the past day. Of this, nearly $101 million worth of contracts were short.
This figure is equivalent to over 80% of the total, implying that these investors who bet on a bearish outcome for the market were the ones most affected by the most recent volatility. Naturally, this makes sense, as assets across the sector have seen green returns in this window, led by Bitcoin. race.
A mass liquidation event like this is popularly called a “squeeze“, and since short positions were the contributing side to most of these liquidations, the squeeze would be known as a “short squeeze.”
During a crisis, sell-offs end up further fueling the price movement that caused them, thus triggering a cascade of additional sell-offs. As such, the sharp rise in prices the previous day would be partly fueled by short squeeze.
As for the breakdown of this latest squeeze for the various tokens, it appears that Bitcoin emerged victorious as usual, with around $45 million in liquidations.
Ethereum (ETH) and Solana (SOL) make up the rest of the top three, with $24 million and $8 million in liquidations, respectively. Interestingly, while most of the sector saw short liquidations dominate, fourth-place XRP (XRP) saw longs decrease. This could be due to the fact that the coin, in general, only moved sideways while the rest moved higher.
BTC managed to reclaim the $62,000 support level
With the latest rally, Bitcoin has staged a significant recovery, with its price briefly rising above the $63,000 level earlier in the day.
The graph below shows how the currency increased:
According to data from the market intelligence platform Inside the blockBitcoin is now floating above the significant on-chain support level of $62,000. “While resistance is strong above, sufficient upside momentum could stave off selling pressure,” the analytics firm notes.