The entire crypto world had been focused on the potential approval dates of ETFs, with expectations of a short squeeze in January 2024, and market leaders had been warning about possible major liquidations that could occur at the beginning of the month. Perhaps no better candidates for this event could be found than Bitcoin (BTC) and Ethereum (ETH). The expected happened, and these speculations, now proven true, became reality.
Current State of Bitcoin and Ethereum
The short squeeze indeed took place on the second day of the month, and Bitcoin’s price soared to $45,950 on January 2nd, reaching a level not seen in over a year.
Ethereum, following the warnings, saw a 10% price increase the next day, advancing to $2,446. Even more interesting, a similar increase to Bitcoin’s was noted within a week from the day of the warnings to the highest levels seen today.
All these movements had a financial impact on investors. The price movements in the last 24 hours liquidated 62,258 investors, resulting in a massive liquidation of $205.73 million.
A total of $127.13 million (61.7%) came directly from the liquidation of short positions, causing the full realization of the situation known as a short squeeze. According to CoinGlass data, a trader on Binance who opened a short position on the BTC/USDT pair experienced a massive loss of $10.16 million in a single liquidation.
Short Selling in Bitcoin and Ethereum
Speaking specifically about Bitcoin, it drew direct attention by causing 45% ($92.63 million) of the total daily liquidations in the crypto market. Even more interesting is that $74.32 million (80%) of this came from Bitcoin short sellers.
Continuing on the topic of BTC, examining the weekly timeframe reveals how it managed to reach the previously reported liquidity zones.
On the other hand, Ethereum reflected a balanced liquidity weight between short and long positions. Of the total $32.28 million in liquidations that occurred, approximately 46% were short positions and 54% were long positions, as presented to crypto followers.
The short selling events can lead to increased rumors in highly volatile markets. Lastly, it should be noted that while individual investors take positions in the market, they are simultaneously being tracked by professional market makers, who later hunt the remaining liquidity left behind by these individuals or institutions.
