Crypto Liquidations Surge to $459 Million in 24 Hours, Majority Long Positions Affected

Total crypto liquidations reached $459 million across the past 24 hours, with long positions accounting for $88.16 million and short positions for $371 million according to LookonChain data. The data, provided by Coinglass, reflects a sharp increase in forced position closures as market volatility persisted. Over 124,640 traders saw their positions liquidated during the period as reported.

The largest single liquidation event totaled $91.33 million, occurring on HTX for the BTC-USDT trading pair according to data. This marked one of the most significant liquidations recorded in the recent period, indicating intense pressure on leveraged positions. Short positions dominated the overall liquidation volume, suggesting a bearish bias among traders that was quickly reversed by market movements as indicated.

In a related development, the broader liquidation data from the same period indicated a total of $527 million in liquidations, with long positions accounting for $87.11 million and short positions for $440 million according to LookonChain. This reinforces the dominance of short liquidations in the recent market action. The data also notes 122,834 liquidated positions, underscoring the widespread impact on traders as reported.

Why Did This Happen?

The surge in liquidations followed a reversal in market sentiment, particularly in the Bitcoin and Ethereum derivatives markets according to Yahoo Finance. Short liquidations accounted for 77.67% of total liquidations, reaching $414.65 million over a 24-hour period according to the report. This suggests that traders had positioned themselves heavily for a decline in prices, a stance that was quickly invalidated by a sudden upward move.

The reversal appears to have been driven by renewed institutional interest in Bitcoin, as US spot Bitcoin ETFs recorded net inflows of $471 million on January 2 as reported. This marked a sharp reversal from the outflows observed in late December. Cumulative net inflows into these ETFs now stand at $57.08 billion, indicating strong institutional confidence in the market.

The divergence in positioning between retail and institutional traders became evident during this period according to market analysis. While retail traders had crowded into short positions, institutional players held a net long position at 76.52%, suggesting that professional investors anticipated further upside. This contrast highlights the importance of analyzing market structure when predicting price movements.

How Did Markets React?

The immediate effect of the liquidation cascade was a broad rally across major cryptocurrencies according to Yahoo Finance. Bitcoin climbed to trade around $93,700, recovering from the consolidation phase that had defined late December. Altcoins also posted significant gains, with XRP leading the surge at 10.8%, followed by Ethereum and Solana as reported.

Exchange-specific data revealed a varied impact of the liquidations according to analysis. HTX bore the brunt of the squeeze, with $108.35 million in liquidations, 96.05% of which came from short positions. This indicates that its user base had been heavily positioned for a price decline as data shows. Hyperliquid and Binance also saw significant short liquidation activity, though Binance's more diverse user base resulted in a lower short ratio according to market reports.

The cascading effect of the liquidations amplified upward momentum in the market according to analysis. As prices rose, short sellers were forced to close positions at a loss, which in turn drove prices higher. This feedback loop intensified the rally and led to further liquidations in a self-reinforcing cycle.

What Are Analysts Watching Next?

Analysts are monitoring the 24-hour long/short ratio, which has now reached a near-even balance of 49.99% long versus 50.01% short according to market data. This suggests that the immediate short squeeze has been absorbed, but the market remains in a state of flux. A close and hold above $94,500 could trigger further unwinding of overhead short positions, according to market observers as reported.

Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are being closely watched for signs of overbought conditions and potential corrections according to FXStreet. For example, Cardano (ADA) is currently trading above the 50-day Exponential Moving Average, with a positive divergence in the MACD suggesting continued bullish momentum as noted.

The broader market is also observing the performance of Ethereum, which has flipped above the 50-day EMA and is testing the $3,260 resistance level according to analysis. A firm breakout could signal renewed interest in altcoins and a broader market recovery. However, the RSI and Stochastic Oscillator indicate that momentum is still in overbought territory, suggesting caution for investors as reported.