Biggest Short Squeeze in Years Triggers Massive Liquidation Event, Bitcoin To Surge Soon

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Cryptocurrencies, including Bitcoin and Ether, surged on Tuesday after the US SEC asked exchanges to update regulatory filings for ether exchange-traded funds (ETFs). Bitcoin soared to $71,957, and Ether reached $3,720.80, levels last seen on April 9. 

This dramatic rise was driven by a massive short squeeze, resulting in the largest liquidation event since 2022. Meanwhile, bitcoin shorts valued at $1.4 billion are at risk of liquidation if BTC’s price reaches $74.3K.

Bitcoin See Record-Breaking Liquidations

Yesterday, Bitcoin’s price jumped over 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 single-day performances in recent years. 

Meanwhile, the futures market saw approximately $259 million in sales 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 Record Massive Inflow

However, the recent inflows reflect a growing interest in Bitcoin spot ETFs, as investors respond to intense accumulation from institutional investors and anticipated interest rate cuts.

Meanwhile, spot bitcoin ETFs recorded $948.3 million in inflows last week, with five consecutive days of inflows. The Ark Invest and 21Shares’ ETF led the charge with an inflow 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.

$1.45 B Short Position @74.3k

As Bitcoin’s price continues to rise, retail investors are expected to contribute to additional buying pressure, driven by the fear of missing out (FOMO). However, analysts caution that short-term corrections may emerge, given the recent volatility and rapid price movements.

With Bitcoin’s price hovering just 3% below its all-time high (ATH) of $73,750, there’s speculation about its next move. If the current bullish momentum persists and Bitcoin surpasses the $74,300 mark, it could prompt the liquidation of approximately $1.45 billion in short positions.