Data shows that after Bitcoin's flash crash in the last 24 hours, the cryptocurrency derivatives market suffered a massive amount of liquidations.
Bitcoin experienced significant volatility in the past day
In the past day, BTC's price movements were quite extreme, with a high of $103,500 and a low of $90,500, all occurring within a narrow window. The drop to the latter was so significant that it can only be described as a flash crash.
From the chart, it can be seen that the sharp red candles lasted only a short time, as the cryptocurrency quickly rebounded to higher levels. After the rebound, the token's trading price was around $98,000, indicating it is still down about 5% from the peak.
As is customary, other top digital assets followed BTC with bearish price movements, but assets like Ethereum (ETH) and Solana (SOL) proved to be more resilient, as their prices only dropped 2% in the past day.
The latest market fluctuations indicate that there is chaos in the derivatives sector of the cryptocurrency space.
Cryptocurrency bulls have just experienced a liquidation squeeze
According to CoinGlass data, due to the severe fluctuations in asset prices across the industry, the cryptocurrency derivatives market suffered a massive amount of liquidations.
As shown in the table above, cryptocurrency derivative positions worth up to $893 million were liquidated in the last 24 hours. A contract is 'liquidated' when the exchange forcibly closes it after the accumulated losses reach a certain level.
Of the nearly $733 million in liquidations, long contracts accounted for 82% of the total. The dominance of longs is naturally a result of the net bearish action experienced by Bitcoin and other currencies.
Incidents of large-scale liquidations similar to those that have recently occurred are commonly referred to as 'squeezes.' Since bulls accounted for the majority of this squeeze, it is referred to as a bull squeeze.
The long squeeze recently faced by the derivatives industry may be a clear result of its previous hot market conditions. As noted by CryptoQuant community analyst Maartunn in an X post, open interest surged alongside Bitcoin's rise.
Generally speaking, whenever derivative positions surge during a rebound, it indicates that the surge is driven by leverage. This type of price movement may lead to liquidations in a volatile manner.
During the recent Bitcoin rally, open positions increased by more than 15%, which is considered a significant amount. When the price reversed, all these leveraged longs got caught in the squeeze, which only exacerbated the crash, explaining its particularly violent nature.
