Massive Liquidations Shake Up The Crypto Market

Bitcoin and Ether crossed major technical thresholds on January 14, triggering nearly 700 million dollars in liquidations on short positions. In the absence of a fundamental catalyst, this brutal movement highlights the weight of market mechanics and leverage effects in the dynamics of cryptos. Thus, in a few hours, the excess exposures were swept away, recalling the vulnerability of poorly calibrated speculative strategies.

Chain liquidations: a break hitting short sellers

On January 14, Bitcoin crossed a critical threshold at 95,000 dollars, before reaching 97,800 dollars during the US session.

This surge, combined with Ether’s, which jumped 5 % to 3,380 dollars, triggered the liquidation of short positions amounting to nearly 700 million dollars.

Traders betting on a market drop saw their positions automatically closed, for lack of sufficient collateral to cover their losses. “Breaking above 95,000$ triggered the liquidation of a large volume of short positions, forcing a buyback demand” said Gabe Selby, Head of Research at CF Benchmarks.

Unlike a movement based on fundamental announcements, this bullish push was essentially technical. It fits into a context of persistent imbalances between buyers and sellers, amplified by the derivatives market structure. Here are the key figures to remember about this wave of liquidations :

• 700 million dollars of short positions liquidated in a few hours ;
• 380 million dollars concern Bitcoin alone ;
• 250 million dollars are linked to Ether ;
• An explosion of trading volumes, without a spike in funding rates ;
• The movement is described as “mechanical” by Gabe Selby, related to a technical adjustment after the October-November drops.

This phenomenon, known as a short squeeze, occurs when short sellers are forced to hastily buy back their positions, fueling a bullish spiral without a fundamental catalyst. Markets were temporarily dominated by forced coverage dynamics rather than an organic inflow of long-term buyers.

A market ready to restart? Encouraging but fragile signals

Beyond the mechanical shock, some analysts see it as a potential signal of a bullish restart for the crypto market as a whole.

Joel Kruger, strategist at LMAX Group, points out that this movement has “awakened the bullish momentum, with participants now considering a rise towards 100,000$, or even a return to all-time highs”.

He specifies that the current momentum is supported by peripheral fundamentals, notably stability in equity markets and US bond yields stabilizing, contributing to restoring risk appetite. Kruger adds that “a weekly close above 95,000$ for BTC, or a surpassing of 3,500$ for ETH, would constitute an important confirmation signal”.

In this context, the Crypto Fear & Greed Index has risen to 61 for the first time since October, marking a notable shift in sentiment. However, observers remain cautious. The lack of fundamental catalysts raises questions about the sustainability of this momentum. The resilience of major altcoins and the market’s ability to maintain these levels without new forced liquidations will be key indicators to monitor closely in the coming days.

This volatility resurgence comes as Bitcoin and Ethereum ETFs attract 646M$ on the first trading day. A strong signal for a market searching for benchmarks, balancing technical adjustments and a progressive return of institutional interest. It remains to be seen whether this momentum will mark a real turning point or a simple temporary bounce.