Crypto short squeeze tops $4b as BTC, ETH and SOL surge and bearish traders suffer historic two-day liquidation wave

2:20

Cryptocurrency markets extended their dramatic recovery on Friday as more than $4 billion of bearish positions were liquidated over two days, forcing traders betting against Bitcoin, Ethereum and other digital assets to rapidly unwind leveraged positions.

Bitcoin climbed above $77,000 during European trading, rising around 8% over 24 hours and more than 20% during the week. The world's largest cryptocurrency later reached approximately $79,400, putting it on course for its strongest weekly performance since March 2023.

Data from CoinGlass showed roughly $1.2 billion of short positions were liquidated during the latest 24-hour period, affecting a market in which 156,211 traders faced liquidations. That followed approximately $3 billion of shorts wiped out on Thursday, the largest single-day short liquidation event in records dating back to 2021.

Bitcoin accounted for around $1.67 billion of Thursday's short liquidations, while Ethereum contributed approximately $1.14 billion. Ethereum had surged around 19% over 24 hours during the initial breakout, while Solana, XRP and Dogecoin also recorded double-digit advances.

The extraordinary move illustrates how leverage can amplify cryptocurrency rallies. When prices rise sufficiently, exchanges automatically close leveraged short positions. Traders are effectively forced to buy back into the rising market, potentially pushing prices even higher and triggering further liquidations. However, analysts remain divided over whether the rebound marks the beginning of a sustained recovery.

Jason Fernandes, co-founder of AdLunam was more cautious saying, "I would be cautious about calling this the end of the bear market, without sustained spot ETF inflows and clearer macroeconomic rate easing."

The competing views underline the central question now facing investors; whether forced short-covering has merely produced an explosive temporary rally, or provided the catalyst for a broader crypto-market recovery.