A massive wave of short liquidations has propelled Bitcoin’s rally, marking the largest bearish unwinding since October 2022 as traders scramble to cover positions.
Short Liquidation Frenzy Ignites Rally
Bitcoin’s price briefly surpassed $94,000 early Tuesday (4am ET), triggering a cascade of short liquidations exceeding $300 million—the largest single-day bearish unwinding since October 2022. While BTC has since pulled back slightly to $93,681 (up 5.7% daily), the squeeze amplified upward momentum as traders rushed to cover positions.
Market Mechanics Behind the Surge
Presto Research analyst Rick Maeda told Decrypt that $156 million of these liquidations occurred on Bybit alone. Key observations: – Funding rates remained below 2%, ruling out a crowded basis trade – The move likely stemmed from either a “large directional bet” or cross-exchange arbitrage collapse – Thin liquidity compared to bull market peaks intensified volatility “It amplifies upside volatility as stops are triggered and margin calls force covering,” Maeda explained.
Bitcoin-Gold Correlation Strengthens
Pat Zhang of WOO X noted Bitcoin has “mirrored gold’s ascent”, hitting consecutive local highs amid global market instability post-Trump’s tariffs. The analyst highlighted a emerging pattern: – Risk-off flows boost gold and gold-backed instruments – Capital spills into BTC, reflecting crypto-macro convergence This interplay suggests Bitcoin is increasingly acting as a risk-off asset alongside traditional safe havens.
Sentiment Shifts to “Greed”
The Bitcoin Fear and Greed Index skyrocketed from 29 (Fear) to 72 (Greed) in just seven days. Decrypt’s prediction platform Myriad estimates an 80% probability the index stays above 55 through April 24.
Institutional Catalysts Loom
Zhang pointed to Cantor Fitzgerald’s planned $3 billion Bitcoin acquisition vehicle as a potential game-changer: – Could accelerate institutional adoption – May trigger capital rotation from retail to institutional holders – Sets stage for $150K+ BTC price targets Total crypto market liquidations reached $650 million, with shorts comprising $565 million of forced closures.