Short Squeeze Triggers $400 Million Liquidation, Highest in Last 3 Months: What Happened?

Jakarta, Pintu News – Liquidation of short positions in crypto markets surged to $322 million in the last 24 hours – the highest figure since Black Friday on October 10 – sparking a massive rally across major digital assets.

This data suggests a significant change in market sentiment, where traders who were betting against price increases (short sellers) were surprised by the sudden spike.

ETF Inflows Drive Institutional Momentum

According to data from Coinglass as of 02:00 UTC on Tuesday (Jan 6), liquidation of short positions accounted for 77.67% of the total liquidation of $414.65 million.

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In that period, approximately 109,672 traders were liquidated. The largest liquidation occurred on HTX, where $91.33 million worth of BTC-USDT positions were forcibly closed. This price rally seems to be driven by the resurgence of institutional interest in Bitcoin .

Data from SoSoValue noted that spot Bitcoin ETFs in the US recorded net inflows of $471 million on January 2, a sharp reversal from the $348 million outflow that occurred on December 31. This is a signal that institutional investor appetite is returning quickly after the New Year holiday.

Cumulatively, net inflows into US spot Bitcoin ETFs have now reached $57.08 billion, with total net assets of $116.95 billion, representing 6.53% of the total Bitcoin market capitalization.

These moves revealed a stark difference between institutional and retail positioning. While retail traders were heavily short ahead of the rally, institutional traders held a net long position of 76.52%, according to market data. This discrepancy suggests that “smart money” has anticipated further price increases.

Conversely, small traders who remain pessimistic will have to bear heavy losses when the price turns up.

Major Crypto Records Significant Gains

Bitcoin surged and traded around $93,700, recovering from the consolidation phase that dominated late December.

Altcoins recorded stronger gains. XRP led the surge with a 10.8% gain, followed by Ethereum by 0.8%, and Solana by 0.5%. On a weekly basis, the gains were more striking: XRP is up 28.8%, Solana is up 11.8%, and Ethereum is up 9.6%.

Liquidation data over the past 12 hours shows very intense market activity, with liquidations totaling $345.15 million in the period. Of that, $305.43 million came from short positions, signaling that the most liquidation pressure occurred in the second half of the last 24-hour period.

Exchange data reveals the magnitude of losses from short positions

Liquidation pressure was uneven across all exchanges. HTX recorded the highest liquidation of $108.35 million, with 96.05% coming from short positions. This suggests that the majority of its users were overly betting on a price drop.

Hyperliquid , which is more commonly used by experienced traders, also shows a high short position ratio of 87.1%, indicating that even professional market participants are mis-positioned.

Read also: Bitcoin Price Held at $93,000 Today: BTC Holder Purchases Strengthen!

Meanwhile, Binance, as the exchange with the largest trading volume, recorded liquidations of $95.65 million, but with a lower short position ratio of 63.4%, reflecting a more diverse user base. This pattern suggests that bearish conviction has become widespread across platforms, and when market sentiment changes abruptly, many traders are unprepared for the price spike.

Chain Effect Strengthens Upward Momentum

The wave of liquidation of short positions creates a chain effect throughout the market. As prices rise, traders who bet on a decline are forced to close positions at a loss, which pushes prices even higher and triggers additional liquidations. This feedback loop reinforces the upward momentum across major cryptocurrencies.

“Panic short covering plus a surge in delta volume saw Bitcoin record its best price movement in quite some time,” said crypto analyst Ardi on the X platform. He noted that nearly $1 billion worth of short positions have been liquidated in the past few days.

He also added that the liquidation map is still unbalanced, with many short positions piling up above the current price, while few long positions exist below it.

The long/short ratio in the last 24 hours is now balanced at 49.99% long and 50.01% short, signaling that the initial liquidation pressure has been absorbed.

According to Ardi, the $94,500 level is a crucial point to watch. If the price is able to close and hold above this level, then there could be further liquidation of the remaining short positions above it.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• BeInCrypto. Short Squeeze Sees $400M in Liquidations, Three-Month High. Accessed on January 7, 2026