Shorts are "squeezed" out! $400 million liquidation wave across the entire network, Bitcoin breaks through $93,000 to hit a new high

The crypto market experienced a typical short squeeze at the beginning of the new year. In the past 24 hours, the amount of short liquidations rapidly expanded to nearly $400 million, hitting a three-month high since October. A large number of short traders were forced to close their positions during the rapid price surge, directly driving Bitcoin and mainstream cryptocurrencies higher simultaneously, resulting in a clear market sentiment reversal. Behind this “squeeze” pattern, there are both retail and institutional position misalignments, as well as continuous net inflows of institutional funds.

Liquidation Data Hits New High, Retail Shorts Suffer Heavy Losses

According to the latest reports, the proportion of short liquidations in total liquidations is close to 78%, with over 100,000 traders being forcibly liquidated. The largest single liquidation involved a position worth over $90 million in BTC contracts on a major CEX, highlighting the vulnerability of high-leverage shorts during the rebound. Within the 12-hour window, liquidation amounts were also abnormally active, further confirming that the upward movement mainly occurred during a short-term concentrated burst.

Why are shorts so vulnerable?

The fundamental reason for this liquidation wave lies in the severe imbalance in market participants’ positions. Institutional funds are predominantly net long, while retail traders generally held short positions before the rally. This misaligned position structure became a key trigger for the short squeeze. As prices started to rise, retail short traders were forced to close their positions, with stop-loss orders and forced liquidations pushing prices higher, creating a “cover—rally—further liquidation” chain reaction, significantly amplifying the upward momentum.

Institutional Funds Drive, ETF Becomes New Engine

A major driver of this rally is the continuous net inflow of institutional funds. The US spot Bitcoin ETF quickly resumed net inflows after the New Year, with daily inflows exceeding $400 million, contrasting sharply with previous outflows. Currently, the total net inflow into Bitcoin ETFs has surpassed $57 billion, and the ETF’s total assets under management continue to increase as a proportion of Bitcoin’s market cap.

Deeper data supports this trend. The cumulative trading volume of US spot crypto ETFs surpassed $2 trillion on January 2, just 8 months after crossing $1 trillion in May 2025, halving the time needed. This reflects a rapid increase in institutional acceptance of crypto assets, with ETFs becoming a primary channel for capital entering the crypto market.

Price Performance and Market Sentiment Reversal

Driven by institutional funds, Bitcoin rebounded to around $93,000, successfully breaking out of the previous consolidation zone. Mainstream cryptocurrencies like XRP, Ethereum, and Solana also strengthened, with XRP showing particularly notable short-term and weekly gains, boosting market risk appetite. On exchanges, the proportion of short liquidations on major CEXs and Hyperliquid was extremely high, even on platforms with more mature traders, bearish positions also suffered heavy losses.

Future Outlook: Can Key Price Levels Hold?

According to the latest data, if Bitcoin breaks through $93,000, the total short liquidation on major CEXs could reach $528 million. This indicates that if prices continue to rise, more short positions will face liquidation risk. Conversely, if Bitcoin drops below $90,000, the total long liquidation on major CEXs could reach $364 million, showing risks on both sides.

Market expectations for the next trend are relatively optimistic. Data from forecasting platforms suggest a 38% probability of Bitcoin reaching $100,000 in January, and a 69% chance of reaching $95,000. These figures reflect market participants’ confidence in further upward movement.

From a personal perspective, the key to this rally lies in whether institutional funds can continue to net inflow. If ETF inflows persist, a new round of short covering could further extend the rally, providing additional upward momentum for Bitcoin in the short term. However, rapid price surges in a high-leverage environment also concentrate risks; if a correction occurs, longs will face liquidation risks as well.

Summary

This $400 million short liquidation wave is a concentrated release of market imbalance. The misalignment between retail shorts and institutional longs, combined with continuous net inflows into US spot Bitcoin ETFs, has jointly driven Bitcoin above $93,000. In the short term, market focus has shifted to whether key resistance levels can be effectively held and whether fund inflows can be maintained. If prices sustain at high levels and break through critical points, a new round of short covering could further expand the rally; however, the dual risks in a high-leverage environment should also be closely monitored. Future developments depend on observing ETF net inflow trends and changes in liquidation data.