Data shows that the cryptocurrency derivatives market has seen significant liquidations following bitcoin's surge above the $63,000 mark.
bitcoin's rally has triggered short position liquidations in the derivatives market
According to data from Coin crystalThe latest volatility in the cryptocurrency market has led to large liquidations on the derivatives side. “Liquidation” here naturally refers to the process that any open contract undergoes, where it is forcibly closed by its platform after it has accumulated losses of a certain degree.
The following table shows how derivatives settlements have been over the last 24 hours:
<img class="wp-image-629798 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/07/Bitcoin-bears-crash-100M-in-crypto-short-positions-plummet-as.png" alt="bitcoin and cryptocurrency liquidations” srcset=”https://technicalterrence.com/wp-content/uploads/2024/07/Bitcoin-bears-crash-100M-in-crypto-short-positions-plummet-as.png 559w, https://www.newsbtc.com/wp-content/uploads/2024/07/table.png?w=460 460w” />
It appears that the cryptocurrency derivatives market recorded total liquidations of $126 million over the past day. Of these, nearly $101 million worth of contracts were short contracts.
This figure is equivalent to over 80% of the total, implying that these bearish market investors were the most affected by the latest volatility. Naturally, this makes sense, as assets across the sector have seen positive returns in this window, led by bitcoin’s rally.
A massive liquidation event like this latest one is popularly referred to as a “squeeze” and since the shorts were the side that contributed to most of these liquidations, the squeeze would be known as a “short squeeze.”
During a squeeze, liquidations end up further fueling the price movement that caused them, triggering a cascade of new liquidations. The sharp price increase of the last day would therefore have been driven in part by the contraction of short positions.
Looking at the breakdown of this latest squeeze across the various tokens, it would appear that bitcoin has emerged victorious as usual, with around $45 million in liquidations.
<img class="wp-image-629801 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/07/1721071283_745_Bitcoin-bears-crash-100M-in-crypto-short-positions-plummet-as.png" alt="bitcoin and other cryptocurrencies” srcset=”https://technicalterrence.com/wp-content/uploads/2024/07/1721071283_745_Bitcoin-bears-crash-100M-in-crypto-short-positions-plummet-as.png 785w, https://www.newsbtc.com/wp-content/uploads/2024/07/data.png?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/07/data.png?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/07/data.png?w=750 750w” />
ethereum (eth) and Solana (SOL) have made up the rest of the top three spots with $24 million and $8 million in liquidations, respectively. Interestingly, while most of the sector has seen short position liquidations dominate, XRP (XRP), in fourth place, has seen long positions shift. This may be due to the fact that the coin, overall, has only moved sideways, while the rest have rallied.
btc has managed to reclaim the $62,000 support level
With the latest rally, bitcoin has been able to stage a significant recovery, with its price even briefly surpassing the $63,000 level earlier in the day.
The chart below shows what the currency's rise has looked like:
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According to data from the market intelligence platform x.com/intotheblock/status/1812762162839891969″ target=”_blank”>In the blockbitcoin is now hovering above the important on-chain support level of $62,000. “While resistance is strong above, sufficient bullish momentum can prevent selling pressure,” the analytics firm notes.
<img src="https://technicalterrence.com/wp-content/uploads/2024/07/Bitcoin-bears-crash-100M-in-crypto-short-positions-plummet-as.jpeg" alt="bitcoin On-Chain Support Levels” />
