Data indicates that the crypto derivatives market recorded significant liquidations after Bitcoin surged above the $63,000 level.
Bitcoin’s surge has led to short liquidations in the derivatives market.
According to data from QueenglassThe recent volatility in the cryptocurrency market has led to massive liquidations on the derivatives side. The term “liquidation” here of course refers to the process by which an open contract is forcibly closed by its platform after it has accumulated losses to a certain degree.
The table below shows how derivatives liquidations looked over the past 24 hours:
The crypto derivatives market appears to have seen a total of $126 million in liquidations in the past day. Of these, about $101 million was for short-term contracts.
This figure equates to more than 80% of the total, meaning that those investors who bet on a bearish market outcome have been hit the hardest by the recent volatility. This makes sense, of course, as assets across the sector have seen green returns this window, led by Bitcoin’s rally.
A mass liquidation event like this last one is called a “squeeze,” and since short sellers were the party that contributed to the majority of these liquidations, the squeeze is known as a “short squeeze.”
During periods of squeeze, liquidations end up feeding into the price action that caused them, thus triggering a series of additional liquidations. As such, the sharp price spike of the past day may have been driven in part by a short squeeze.
As for the collapse of this latest squeeze of various tokens, Bitcoin seems to have come out on top as usual with around $45 million in liquidations.
Ethereum (ETH) and Solana (SOL) rounded out the rest of the top three with $24 million and $8 million in sales, respectively. Interestingly, while most sectors saw short liquidations dominate, Ripple (XRP) in fourth place saw long sales outperform. This could be due to the fact that the coin generally only moved sideways while the rest of the coins rose.
Bitcoin managed to reclaim the $62,000 support level.
With the recent surge, Bitcoin has managed to stage some significant recovery, briefly rising above the $63,000 level earlier today.
The chart below shows how the coin looked like:
According to data from market intelligence platform In the massBitcoin is now floating above the important on-chain support level at $62,000. The analytics firm notes that “while resistance is strong above, sufficient upside momentum could prevent selling pressure.”