Fintech
Biggest Short Squeeze in Years Triggers Massive Liquidation Event, Bitcoin Will Rise Soon
Cryptocurrencies, including Bitcoin and Ether, surged on Tuesday after the US SEC asked exchanges to do so update regulatory documentation for Ether Exchange Traded Funds (ETFs). Bitcoin rose to $71,957, while Ether reached $3,720.80, levels last seen on April 9.
This dramatic increase was driven by a massive short squeeze, leading to the largest liquidation event since 2022. Meanwhile, bitcoin shorts valued at $1.4 billion are at risk of liquidation if BTC’s price reaches the 74.3 thousand dollars.
Bitcoin: record liquidations
Yesterday, Bitcoin’s price surged more than 8%, marking one of its best days in 2024 that caught the attention of investors and analysts alike. This surge was largely driven by a short squeeze, where a sudden price increase forced traders holding short positions to buy back Bitcoin to cover their losses.
This buying pressure increases Bitcoin’s price movement, resulting in one of the most notable daily performances in recent years.
Meanwhile, the futures market saw around $259 million worth of contracts liquidated in a single day. This liquidation not only generated significant cash buying pressure, but also marked the largest short contract liquidation event since 2022.
Bitcoin ETF sees massive inflow
However, the recent inflows reflect growth interest in spot Bitcoin ETFs, as investors respond to intense accumulation by institutional investors and expected interest rate cuts.
Meanwhile, spot bitcoin ETFs saw inflows of $948.3 million last week, with five consecutive days of inflows. The Ark Invest ETF and 21Shares led the charge with inflows of $68.2812 million, followed closely by BlackRock’s iShares Bitcoin Trust with $66.3502 million and the Grayscale Bitcoin Trust with $9.3475 million dollars.
$1.45B short position @74.3k
As the price of Bitcoin continues to rise, retail investors are expected to help increase buying pressure, driven by fear of missing out (FOMO). However, analysts warn that short-term corrections could emerge, given recent volatility and rapid price movements.
With Bitcoin’s price hovering just 3% below its all-time high (ATH) of $73,750, there is speculation about its next move. If the current bullish momentum persists and Bitcoin breaks above the $74,300 mark, it could lead to liquidation of approximately $1.45 billion in short positions.