Bitcoin Surge Triggers $1.25 Billion in Liquidations

Bitcoin's recent surge past $118,000 has triggered a record-breaking $1.25 billion in liquidations within a single day. This unprecedented event highlights the growing participation in the Bitcoin derivatives market and raises questions about the sustainability of the current trend, especially amidst warnings of potential long liquidations.

According to liquidation data, total market liquidations exceeded $1.25 billion over the past 24 hours, with $1.12 billion of that amount coming from short positions. Bitcoin alone saw over $656 million in liquidations, indicating that traders had heavily bet on a market correction once Bitcoin passed $112,000. However, this correction did not materialize, leading to significant losses for those who had taken short positions.

One notable example is James Wynn, a well-known trader who frequently uses high leverage on Hyperliquid. According to Lookonchain, Wynn’s leveraged short position on BTC was fully liquidated in under 12 hours, resulting in a loss of $27,921.63. Byzantine General, an advisor at Velo, reviewed data from several exchanges and concluded that this might be the biggest short squeeze on Bitcoin in years.

Liquidations could grow even larger in the coming days as Open Interest (OI), which reflects the total value of futures contracts, has reached a new all-time high this July. Total crypto market OI has now surpassed $177 billion, the highest level on record. Bitcoin’s OI alone has hit $78.6 billion, another record. This shows intense interest from traders in the current market and indicates that the market is in an extremely sensitive phase. High OI shows that many traders are using heavy leverage, and even a small price swing in Bitcoin could trigger massive losses.

Market sentiment is also shifting as BTC price rises. Traders are increasingly moving from short positions to long ones, betting that the rally will continue. Coinglass liquidation heatmap shows that cumulative long liquidations now outweigh short liquidations. Analyst Joe Consorti warned of risks in this setup, stating that long liquidation leverage now outnumbers short leverage 10:1 in this range. This shift suggests that Bitcoin and altcoins’ recent rally has convinced traders to change their expectations. However, this optimism comes at a cost, as a surprise news event or sudden volatility could still trigger major losses.