Bitcoin Hits $87K After A Massive Short Squeeze

Bitcoin nearly reached $87000 before falling back to around $85000, after a rise largely amplified by the liquidation of short positions. About one billion dollars of leveraged bets were immediately closed in the crypto market.

Nearly one billion dollars liquidated in 24 hours

From nearly $75000 last week, Bitcoin rose to an intraday high of $87000. This level, unprecedented since January, caught investors betting on a continuation of the correction off guard.

Various data shifted throughout the session. An initial estimate indicated $746.6 million of positions liquidated, including $647.9 million of short bets. Later, the total exceeded one billion dollars, according to provided figures.

The key figures justify the scale of this liquidation :

• About one billion dollars of positions were closed ;
• Nearly $900 million involved short positions ;
• More than 139,000 traders were liquidated;
• The largest individual position exceeded $20 million ;
• Bitcoin peaked at $87000 before falling back towards $85000.

The $900 million total details that short positions comprised nearly 90% of the liquidated amounts in the most recent data. Exclusively for Bitcoin, $454 million was counted for liquidated short positions, versus only $53 million for long positions.

Liquidations accelerated Bitcoin’s advance

A short position allows a trader to bet on a price decline. When leverage is used and the market moves too sharply, the margin is no longer sufficient to cover the loss. The exchange then immediately closes the position.

Such a closure usually requires buying back Bitcoin or the relevant contract. These forced buys support the price, trigger new liquidations, and provoke a cascading effect. This phenomenon is called a short squeeze.

In the first wave, Bitcoin rose from $81,525 to over $85,250 in two hours. After a brief pullback to $81,150, a second surge pushed the price up to $86,332, then $87,000.

Breaking above $82,000 was a trigger. This area had blocked multiple recovery attempts since early September. Once this resistance was overcome, Bitcoin approached $84,000 in less than five minutes.

However, one billion dollars in liquidations does not equal one billion dollars of new cash invested spot. This amount represents the notional value of closed positions. It mainly measures the vulnerability of indebted traders to rapid market swings.

Bitcoin’s return near $85,000 shows the movement’s limits

Bitcoin gave up some gains and stabilized around $85,000 after its $87,000 high. This pullback does not automatically question the rally; however, it confirms that forced buybacks cannot indefinitely support the price.

Statistics also reveal that the market has not reduced its risk exposure. Open interest on derivatives increased by 7.59% to $156 billion, even as hundreds of millions of positions were liquidated. Concurrently, the 24-hour volume surged 39% to $224 billion.

Such a combination indicates new traders quickly replaced the closed positions. Leverage remains high. If Bitcoin crashes suddenly, long positions would themselves undergo a cascade of liquidations.

However, spot demand contributed to this movement. According to Glassnode, buyer flows on spot and perpetual markets turned positive again. Purchases were therefore not solely from automatic closures of short positions.

The $88000 and $82000 levels become decisive

The next resistance is around $88000. Many analyses identify a significant selling zone at this level. A sustained breakout would bring the $90000 and then $95000 thresholds back into focus, without guaranteeing they will be hit.

Conversely, the zone between $80000 and $82000 now represents the main short-term support. Breaking it could weaken the rally and expose recently opened long positions.

The evolution of liquidations, open interest, and spot purchases will be more important than the mere transient move to $87000. A rise accompanied by a decrease in leverage could offer a firmer foundation than a new surge mainly fueled by forced closures.