When Bears Meet Bulls: $400M Crypto Liquidation Shock!

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In the enchanted realm of cryptocurrency, a most astounding spectacle unfolded-short-position liquidations surged to a staggering $322 million within a mere 24 hours, the highest since the infamous Black Friday on October 10. This sudden upheaval ignited a jubilant rally among the major digital assets, leaving many traders as bewildered as a cat in a dog park.

The data reveals a theatrical transformation in market sentiment, as those who had bet against rising prices found themselves caught like a deer in headlights, utterly unprepared for this unexpected surge of enthusiasm.

ETF Inflows: The Institutional Juggernaut Rolls On

As per the chronicles of Coinglass at the witching hour of 2:00 am UTC on Tuesday, short liquidations accounted for an overwhelming 77.67% of total liquidations, which reached a dazzling $414.65 million. Approximately 109,672 traders were liquidated during this tempestuous period. The most colossal single order took place on HTX, where a BTC-USDT position worth $91.33 million met a rather unfortunate fate.

This rally seems to have been fueled by a fresh wave of institutional interest in Bitcoin, as US spot Bitcoin ETFs recorded net inflows of $471 million on January 2, according to the wise sages at SoSoValue. This marked a stunning reversal from the $348 million outflow observed on December 31-a clear sign that institutional appetites returned with the zeal of a New Year’s resolution.

The cumulative net inflows into US spot Bitcoin ETFs have now swelled to an impressive $57.08 billion. Total net assets stand tall at $116.95 billion, representing a hearty 6.53% of Bitcoin’s total market capitalization, a number one would typically only see in fairy tales.

This squeeze showcased a glaring chasm between the institutional elite and the retail foot soldiers of the market. While retail traders had huddled together in their shorts before the move, institutional traders maintained a robust net long position at 76.52%. The divergence is a testament to the sagacity of smart money as it anticipated further ascension, while smaller players remained ensnared in their bearish dreams-a wager that turned out to be as costly as a bad haircut.

Major Cryptocurrencies Dance to a New Tune

Bitcoin pirouetted to trade around $93,700, emerging from the slumber of consolidation that had dominated late December. Meanwhile, altcoins displayed even more vigorous growth, with XRP leading the charge at 10.8%, followed by Ethereum and Solana at 0.8% and 0.5%, respectively. Over the week, the gains were even more pronounced, with XRP soaring 28.8%, Solana rising 11.8%, and Ethereum increasing by 9.6%-a veritable festival of numbers!

The 12-hour liquidation data revealed a frenzy of activity, with total liquidations reaching $345.15 million during that window. Of this, a staggering $305.43 million stemmed from short positions, indicating that the bulk of the squeezing occurred in the thrilling latter half of the 24-hour saga.

Exchange Breakdown: A Comedy of Errors

But alas, the pain was not distributed evenly across the land. HTX bore the brunt of the calamity, recording $108.35 million in liquidations, with a jaw-dropping 96.05% attributed to short positions. This suggests that its user base had been heavily positioned for a downturn-a classic case of putting all one’s eggs in the same leaky basket. Hyperliquid, the darling of more astute traders, displayed a similarly skewed 87.1% short ratio, proving that even the seasoned veterans can find themselves on the wrong side of the tracks.

Binance, the kingpin of exchanges, recorded $95.65 million in liquidations but with a comparatively lower 63.4% short ratio, reflecting a more diverse populace of traders. This pattern paints a picture of a market where bearish conviction had built up broadly, leaving traders across platforms vulnerable when the tides of sentiment suddenly turned.

A Cascade of Joy: Momentum on the Rise

The tumultuous wave of short liquidations created a cascading effect throughout the market. As prices soared, beleaguered bearish traders were compelled to close their positions at a loss, which only drove prices higher and triggered further liquidations-a delightful feedback loop that amplified the upward momentum across the realm of major cryptocurrencies.

“The short-covering frenzy, coupled with exploding volume delta, gifted Bitcoin its most thrilling price action in ages,” exclaimed crypto analyst Ardi on X, his enthusiasm palpable. He noted that nearly $1 billion in shorts had been vaporized over recent days, adding that the liquidation map still appears lopsided with hefty short positions stacked high above current prices, while few long clusters sit below-a lesson in humility for all.

$BTC liquidated almost $1 billion worth of shorts over the last few days.

Short covering frenzy + volume delta exploding gave Bitcoin its best price action in a long time. Bears got torched.

Liquidations map still looks completely lopsided. Almost no thick long liq clusters…

– Ardi (@ArdiNSC) January 6, 2026

Now, the 24-hour long/short ratio has balanced to 49.99% long versus 50.01% short, indicating that the immediate squeeze has been absorbed. According to Ardi, $94,500 is the pivotal level to watch. A close and hold above could trigger further unwinding of overhead short positions, akin to watching a magician pull a rabbit out of a hat.

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2026-01-06 06:30