Bitcoin's $104K Surge Triggers $970M Liquidation Tsunami, Exposing Leverage and Bulls' Resolve

The crypto market’s latest spectacle unfolded in May 2025 as Bitcoin (BTC) surged toward its all-time high of $109,000, briefly touching $103,750 on May 9. The rally didn’t just rewrite price charts—it triggered a historic wave of derivatives liquidations, wiping out $970 million in bets in a single day. The vast majority, $836 million, belonged to short sellers who bet against Bitcoin’s rise. This event, the largest short liquidation since 2021, underscores the extreme leverage fueling today’s crypto markets and sets the stage for a pivotal test of bullish resolve.

The Price Surge: A Volatile Leap

Bitcoin’s climb in early May 2025 was anything but steady. After closing at $97,205 on May 1, the asset surged 6.7% to $103,740 by May 9—a move that brought it within striking distance of its 2025 high. The most dramatic day was May 8, when Bitcoin rocketed from $97,350 to $101,780, a 4.6% jump, before consolidating the next day. Volume spiked during this period, with May 8’s 8,984 futures contracts traded marking a relative high for the month.

The Liquidation Tsunami: Shorts Swept Away

The $970 million liquidation cascade on May 9 was a direct consequence of Bitcoin’s rapid ascent. Short sellers, who had accumulated $836 million in positions betting on a price drop, were crushed as prices breached $100,000. This event highlighted the precarious nature of leveraged trading in crypto derivatives markets.

But the risks didn’t end there. Analysts warned that long-position holders faced their own vulnerabilities. If Bitcoin slipped below $100,000, an additional $2 billion in long liquidations could occur—a scenario that would amplify market instability. Worse still, a drop below $98,000 could trigger a catastrophic $3.45 billion in total liquidations, according to market data.

Open Interest: A Double-Edged Sword

The record-breaking $67.4 billion in Bitcoin futures open interest (as of May 2025) signals unprecedented leverage in the market. Historically, such peaks have preceded corrections, as seen in 2021 when Bitcoin’s price retreated after hitting $64,000. The current open interest is 45% higher than its previous peak in 2021, suggesting even greater volatility ahead.

Market Sentiment: Bulls in Charge, but at What Cost?

Traders have rushed to pile into long positions, reflecting bullish sentiment. This shift is logical: Bitcoin’s market capitalization briefly hit $2.05 trillion, surpassing Amazon’s valuation and cementing its status as the fifth-largest global asset by market cap.

Yet this optimism comes with a cost. The same leverage fueling gains also amplifies downside risks. Paul Howard, a crypto analyst, noted that options market activity and declining DeFi stablecoin TVL (Total Value Locked) could foreshadow a pullback. “The market is pricing in a binary outcome: either Bitcoin sustains this momentum, or we see a violent reversion,” he said.

Conclusion: A High-Stakes Balancing Act

Bitcoin’s May 2025 surge to $104,000 is a testament to its enduring allure as a speculative asset. However, the $970 million liquidation event and record open interest reveal the fragility of this momentum. Bulls have won the latest battle, but the war hinges on whether prices can hold above critical support levels like $98,000.

If Bitcoin can stabilize above $100,000, the $2.05 trillion market cap milestone could become a new floor, unlocking further gains. Yet the $3.45 billion liquidation risk below $98,000—and the precedent of open interest-driven corrections—warns of a brutal reckoning if sentiment shifts.

In this high-leverage environment, Bitcoin’s path forward is as much about psychology as fundamentals. For now, the bulls are in control, but the data shows the market is tighter, more volatile, and riskier than ever before. The question isn’t whether Bitcoin can hit $109,000 again—it’s whether it can survive the leverage-fueled storm brewing beneath the surface.