Bitcoin Surge Over $34,000 Leads to Massive Short Squeeze, Wiping Out $220 Million in Shorts in 24 Hours

Bitcoin Surge Over $34,000 Leads to Massive Short Squeeze, Wiping Out $220 Million in Shorts in 24 Hours

Crypto News – In the recent surge, Bitcoin’s price catapulted past the $34,000 mark, leading to a substantial upheaval in the cryptocurrency market. Data from Coinglass indicates that over the past 24 hours, more than $220 million worth of leveraged short positions were liquidated.

This surge in the price of Bitcoin triggered a significant domino effect in the broader cryptocurrency market. Derivatives traders witnessed liquidations exceeding $400 million during this 24-hour period. Short positions bore the brunt of this market upheaval, with an astonishing $304 million in short positions being liquidated, compared to $97.5 million in long positions. This episode marked the largest liquidation event since August 17, when Bitcoin’s value plummeted by 9%, dipping below the $25,000 threshold.

Bitcoin, as the world’s largest digital asset by market capitalization, recorded a remarkable surge of over 13% within the past day, reaching a trading price of $34,614 as of 7:30 a.m. ET, as reported by CoinGecko. This upward momentum also reflected in the overall cryptocurrency market capitalization, which surged to $1.32 trillion, marking a notable 9.8% increase within the same 24-hour period, according to CoinGecko’s data.

André Dragosch, Head of Research at Deutsche Digital Assets, explained that this recent surge in Bitcoin’s price was primarily fueled by a massive wave of short futures liquidations, characteristic of a classic short squeeze. However, Dragosch pointed out that in the lead-up to this short squeeze, several significant on-chain developments were observed. Notably, there was a substantial increase in transfer volumes from both small and large entities. Moreover, the continuous outflow of funds from larger wallets, exceeding $10 million in size, indicated a significant accumulation of Bitcoin by large-scale investors before the price surge.

Nevertheless, Dragosch expressed caution, suggesting that a price correction remains a possibility. He emphasized that many sentiment indicators have shown signs of exuberance, and it wouldn’t be surprising to witness a price correction, at least in the short term.

Market analysts have identified bullish signals amidst this tumultuous market activity. Sergei Gorev, the Risk Manager at YouHodler, noted an increasing interest in Bitcoin from institutional investors, driven by economic uncertainty and global instability. He remarked that in the past week, there has been a notable surge in capital inflows into cryptocurrency products, with approximately 80% of these inflows directed towards Bitcoin-related products. He pointed out that people are now viewing Bitcoin more as an asset for wealth preservation, rather than merely a payment instrument to safeguard against global inflation.

Gorev’s observations align with a recent report from CoinShares, which revealed that digital-asset investment products experienced net inflows of $66 million during the past week, marking the fourth consecutive week of inflows totaling $179 million. Additionally, Gorev highlighted the significance of November, historically known as one of the strongest months in the cryptocurrency calendar.

Hatu Sheikh, the co-founder of DAO Maker, highlighted another positive sign for the market. He drew attention to the narrowing discount of the Grayscale Bitcoin Trust (GBTC) since the beginning of October. According to data from YCharts, shares in GBTC narrowed to a 12.38% discount to the trust’s net asset value on a recent Tuesday.

Sheikh interpreted this sharp rebound in GBTC’s price as a reflection of the market’s growing confidence that the U.S. Securities and Exchange Commission (SEC) may be compelled by judicial authorities to ease its bias against Bitcoin product issuers and the broader cryptocurrency space. Furthermore, Sheikh noted that the convergence of GBTC’s price with the underlying Bitcoin price suggests an increased likelihood of approval for a spot Bitcoin Exchange-Traded Fund (ETF). Such an ETF would not only draw significant capital but also bring it through traditional financial markets rather than the cryptocurrency exchanges.