Crypto Shorts Suffer $300M Flush As Bitcoin Hits $80,000

Related Reading: Bitcoin DATs Capitulate—Could This Rare Signal Mark A Bottom? The chart below shows how the latest price action has looked for the asset. From the graph, it’s visible that Bitcoin has pulled back a bit since the high, as its price is now floating around 79,900. Nonetheless, the coin remains above recent levels. As is usually the case, the rest of the digital assets have also followed in the footsteps of the original cryptocurrency with recovery spikes of their own. All this market volatility has naturally meant that chaos has developed on the derivatives side of the sector. Crypto Derivatives Liquidations Exceed 370 Million According to data from CoinGlass, the latest volatility in the cryptocurrency sector has resulted in liquidations of a significant size. “Liquidation” here refers to the forceful closure that any open contract undergoes after it has amassed losses of a specific percentage. The chances of a contract being liquidated depend on price volatility and how much leverage the investor has opted for. In the digital asset market, coins regularly show volatile swings and leverage usage tends to be high, so events where a large amount of contracts are caught out aren’t rare. One such event has occurred during the past day, and below is a table that showcases the numbers relevant to this derivatives flush. In total, over 371 million in cryptocurrency contracts have been liquidated over the last 24 hours. Out of these, 302 million of the contracts were short positions. This means that more than 81 of the liquidations involved the investors betting on a bearish outcome for the market. In terms of the individual assets, Bitcoin-related positions contributed the most toward the event, with over 179 million in contracts involved. Ethereum once again was second on the list with 95 million in liquidations. Together, the top two coins by market cap made up for roughly 74 of the total derivatives flush from the past day. Related Reading: Bitcoin Rejected At Key Cost Basis Zone—Is 68,000 The Next Support? A mass liquidation event like the one from the past day is popularly known as a squeeze. During a squeeze, a sharp swing in the price triggers a large amount of simultaneous liquidations, which feed back into the price move, unleashing a further cascade of liquidations. As shorts made up for the majority of the latest squeeze, the event would be called a short squeeze. Featured image from Dall-E, chart from TradingView.com