According to Data from Bybt, a cryptocurrency futures trading and information platform, the total amount of future contract liquidation on centralized exchanges hit a record $1.14 billion in the past 24 hours with 104,014 traders liquidated from their short positions on cryptocurrencies. This has been the most liquidation since May 19.
Shorting a crypto asset in principle means the investor’s main objective is to sell the digital asset at a high price and buy it back at a lower price. Unlike most investors who like to buy cheap and sell at a premium, short-sellers adapt the order of this mechanism by aiming to sell high and buy low. This process is permitted in the Crypto derivative market.
The liquidation shows that a lot of futures traders were betting for the cryptocurrency market to go further down (sell-off) but the market had other plans as flagship cryptocurrency Bitcoin quickly recovered from trading a low of $29,360.96 last week Tuesday to currently stand at $39,750, a 35% gain, as of the time of writing this report. Other cryptos in the altcoin market also saw double-digit gain WoW.
The bybt exchange accounted for 38.67% of the total liquidations, amounting to $437 million. This was followed by Huobi exchange which accounted for $218 million and Okex coming in third with $217 million. Binance exchange, the largest cryptocurrency centralized exchange by volume came in fourth, accounting for $129 million, representing 11.37%.
The rally in the market can be linked back to a violent short squeeze occurring as prices broke above $35,000, and then suddenly accelerated by 11% from roughly $35,350 to $39,280 in less than three hours in the Asian session today. Cryptocurrency on-chain analytics expert, Willy Woo had earlier predicted that a short squeeze was coming in his newsletter posted on Friday. This indicates that a lot of short-sellers are in the market and unfortunately, they have been liquidated out of their positions.
Bottomline
The cryptocurrency market looks to be going to another bull run phase in which many experts have had wild predictions, especially for the price of Bitcoin.
Bitcoin is currently up 15.47% for the day and the total cryptocurrency market capitalization currently stands at approximately $1.55 trillion, as of the time of writing this report.
