Data shows a large amount of Bitcoin short positions have been liquidated following the cryptocurrency’s surge 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 during the past day as its price has hit the $79,300 level after a jump of nearly 5%. The below chart shows how the recent trajectory of the cryptocurrency has looked.
Bitcoin also made an attempt at recovery last week, but that push ended up fizzling out as the asset approached the $78,000 level. This new surge has taken the cryptocurrency beyond this mark, to levels not seen since the first few days of February.
Since the rally has been sharp, it has unleashed a wave of chaos over on the derivatives side of the sector.
A Large Amount Of BTC Liquidations Have Piled Up On Exchanges
According to data from CoinGlass, Bitcoin has seen a notable amount of liquidations following the volatility of the last 24 hours. “Liquidation” here refers to the forceful closure that any open contract undergoes after it has amassed losses of a certain degree.
Below is a heatmap that shows how daily liquidations have compared between the various assets in the sector.
It would appear that Bitcoin has been the number one contributor of liquidations in the market like usual, with more than $222 million in positions related to the asset getting flushed during the past day. About $205 million of these positions were short ones, meaning that bearish bets made up for an extreme majority of the liquidations.
Shorts being the most heavily affected side is naturally down to the fact that the cryptocurrency has seen a sharp surge inside this window. Ethereum, which has seen the second-largest derivatives flush, also saw the shorts make up for $99 million of its $115 million in total liquidations.
In total, the digital asset sector as a whole has witnessed nearly $449 million in liquidations over the last 24 hours.
From the table, it’s apparent that $365 million or over 80% of these liquidations involved short positions, reinforcing the bullish wave that the sector as a whole has seen in this period.
A mass liquidation event like today’s is popularly known as a squeeze. Since the latest event has involved mostly shorts, it would be called a short squeeze. Generally, these events kickstart after a sharp swing in the price unleashes an initial wave of liquidations. This flush then feeds back into the move, which causes even more liquidations in the market.
In the cryptocurrency sector, these events aren’t exactly a rare sight due to the volatility that coins tend to see on the regular and leverage use being widespread among derivatives traders.