More than $600 million in cryptocurrency derivatives positions have been liquidated since late Sunday when Bitcoin (BTC) surged to $106,000 in the early morning, only to reverse course and drop back to around $103,000, surprising both the buyers and sellers.
This move began around 21:00 UTC on Sunday when Bitcoin soared more than $2,500 in less than an hour — a pattern potentially caused by thin weekend liquidity and algorithmic buying triggered by technical levels.
Such price action is textbook short-squeezing followed by strong profit-taking or stop-loss selling. A short squeeze occurs when traders betting against the price (short sellers) are forced to buy the asset as the price rises to cover their losses, pushing the price even higher and often very quickly.
This sudden move wiped out more than $460 million in long positions and $220 million in short positions across futures contracts tracking major coins like Ether (ETH), Solana (SOL), and Dogecoin (DOGE).
The wave of liquidations is notable as it occurs during weekend hours that are typically quite quiet, an unusual event marking the forced buying or selling activity of a large entity.
Data shows that the prices of SOL, DOGE, and XRP have dropped more than 4% in the past 24 hours, with CoinDesk (CD20) falling over 2%.
This volatility comes after a week of macroeconomic instability, with Moody's downgrading the U.S. credit rating on Friday and inflation fears resurfacing after mixed economic data. The downgrade also pushed U.S. 30-year Treasury yields above 5%.
While cryptocurrencies are broadly benefiting from new institutional investment inflows and the momentum of spot ETFs, traders remain cautious at current price levels, as reported.
Bitcoin has been sideways over the past week, but failing to hold above $106,000 — a significant psychological and technical level — could recently signal short-term resistance, Alex Kuptsikevich of FxPro shared with CoinDesk last week.
Meanwhile, some traders are predicting that volatility will be higher in the coming days, a warning sign for those looking to capitalize on their betting opportunities.
Haiyang Ru, co-founder of HashKey Business Group, shared with CoinDesk in a Telegram message that: "Investors are shifting capital into Bitcoin due to concerns that a pending spending bill in the U.S. could add thousands of billions of dollars in debt and drive Treasury premiums higher."
"But while Bitcoin hovers just below new highs, we anticipate the market will be more volatile as traders prepare for new trading deals and the final version of fiscal policy," Ru added.
