Nearly $200M in Liquidations on Short Squeeze for Bitcoin and Ether Futures
- In response to a wider decline in Eurasian markets, Bitcoin slipped under $20,000 on Thursday.
- Following a short squeeze, Bitcoin reached over $20,900 early on Friday in Asian time, traders grabbed profits, causing the price to fall to $19,400 at the time of writing.
- When an exchange forcibly terminates a trader’s leveraged position as a result of a partial or complete loss of the trader’s initial margin, this is referred to as liquidation.
Bitcoin and Ether prices saw a volatile Thursday, with both digital currencies breaking above and then back below key resistance levels. Futures tracking Bitcoin and Ether racked up close to $200 million in liquidations as a result of the price swings. The volatility may have been caused by a number of factors, including renewed interest in cryptocurrencies from institutional investors and positive news about major companies introducing cryptocurrency products and services.
Bitcoin’s price movements over the past 24 hours have been nothing short of volatile. After dipping below $20,000 during Thursday’s Eurasian market sell-off, Bitcoin recovered and even managed to touch above $20,900 during early Friday morning trading hours in Asia. However, profit-taking soon set in and prices have since fallen back to around $19,400 at the time of writing.
Looking ahead, it remains to be seen whether Bitcoin can continue its recent recovery or if this is just a temporary respite from the bear market that has dominated much of 2022. One thing is for sure though – with volatility like this, crypto traders are sure to be kept on their toes in the days and weeks ahead.
The cryptocurrency market is still trying to recover from the volatility seen earlier this week. Central bankers’ comments signaled that relief from rate hikes may not occur in the coming months, which spooked many traders and caused prices to drop sharply.
Futures tracking other major cryptocurrencies, such as Solana’s SOL and Avalanche’s AVAX, saw just over $5 million in liquidations each, implying their price action was mostly spot-driven. The market is slowly starting to stabilize, but it will take some time before prices return to their pre-volatility levels.