The bitcoin (BTC) price rose by a decent 9% yesterday. That will of course sound like music to the ears of many crypto investors, but there were still a lot of people who still lost money. Those were the short merchants. They bet that the price of bitcoin would sink further, but fished next to the net. In total, some $185 million was lost in 24 hours by traders in a short position.
Shorts go ‘stretchy’
In total, $200 million in liquidations were completed in the past 24 hours, it said data from CryptoQuant. A liquidation means that a leveraged position, ie leverage, of a trader is so deep in the red that the trading platform automatically closes the open position. At that point, the trader actually loses his entire bet.
$185 million of the total amount of liquidations took place in the camp of short traders. They bet money that the prices would fall further, but when a serious increase was started, they came into a tight spot. Subsequently, the short traders were liquidated, which in turn led to further upward pressure on prices. This again resulted in more shorts being liquidated.
Such a chain reaction of traders getting liquidated is something we regularly see in the market during periods of high volatility. Both during sharp declines and sharp rises, as we saw yesterday of course.
Mainly traders who have positions in bitcoin and ethereum (ETH) were hit hard. That is of course not surprising, since the trading volume on these two cryptocurrencies is by far the largest in the entire market. Bitcoin short traders saw $85 million go up in smoke, while for ether short traders it was $58 million.
Bitcoin price almost to $25,000
Despite the big loss for short traders, the market is obviously looking a bit more positive for many crypto investors. After all, the important USD 25,000 level is down within reach.
For that reason, the sentiment in the market has returned like lightning. According to the Bitcoin Fear & Greed index is even cautious to speak of ‘greed’ in the crypto market.