Bitcoin Surge Liquidates $1 Billion in Short Positions

On Thursday, Bitcoin short-sellers faced significant losses as the cryptocurrency surged to unprecedented heights, leading to the liquidation of over $1 billion in short positions within a 24-hour period. This event impacted a substantial number of traders, with approximately 232,149 individuals affected. The liquidations were primarily concentrated in Bitcoin (BTC) and Ether (ETH), with $570 million and $206.93 million in short positions wiped out, respectively. Bitcoin liquidations alone amounted to $590.04 million, with only $20.21 million being long positions.

The surge in Bitcoin's price reached new record highs for the second consecutive day, peaking at $112,000 on Wednesday and $116,500 on Thursday. Ether also experienced a significant increase, reaching $2,990 on Thursday. This price movement triggered a massive short squeeze, causing a ripple effect throughout the crypto industry. The market capitalization of the crypto market spiked by 4.4% over the past 24 hours, reaching $3.63 trillion. Analysts and traders responded to the event with a mix of surprise and excitement. Crypto analyst Miles Deutscher described the situation as "Bears in disbelief," while crypto trader Daan Crypto Trades referred to it as a "MASSIVE Short squeeze on BTC & ETH." Velo noted the significant liquidation event, stating, "Lots of emails are being sent."

The Crypto Fear & Greed Index remained steady on Thursday, holding at a "Greed" score of 71 out of 100, down two points from the previous week's score of 73. This index reflects the overall sentiment in the crypto market, indicating a high level of optimism despite the recent volatility. The liquidation event on Thursday was one of the larger ones in recent history, although it was not the largest. On February 3, over $2.24 billion in positions were liquidated amid growing concerns of a global trade war.

Earlier in the week, analysts were divided over whether Bitcoin would reach new highs. Bitfinex analysts expressed skepticism, noting a "lack of follow-through strength" in Bitcoin traders as the cryptocurrency struggled to break its current all-time high level. They suggested that bulls were hesitant or unable to push prices significantly higher without fresh catalysts or clearer macro signals. However, other analysts were more optimistic. Michael van de Poppe, founder of MN Trading Capital, predicted that the inevitable breakout to an all-time high on Bitcoin might occur during the upcoming week.

Currently, traders are betting on the price remaining stable or rising further. Approximately $2.11 billion in long positions are at risk of liquidation if Bitcoin retraces to Wednesday’s price of $112,000. This highlights the ongoing volatility and uncertainty in the crypto market, where significant price movements can lead to substantial gains or losses for traders. The recent liquidation event serves as a reminder of the risks involved in short-selling cryptocurrencies, as sudden price surges can result in massive losses for those holding short positions.