The volume of liquidations of short positions in BTC reached the annual maximum

Kee Yang Ju, CEO of analytics firm CryptoQuant, revealed that the bitcoin market has recently been able to reach its highest level in the past year in terms of liquidating short positions. Due to the fact that traders were forced to buy the main crypto asset at higher prices than they expected, Bitcoin showed such a strong growth. This applies to all exchanges.

The biggest short liquidation was achieved on October 26th when bitcoin rose to $21,000. Then all over the world positions were forcibly closed for a total of $331,800,000. Ki Yang Ju reported the likelihood of such an event back in July. At the time of writing, BTC is worth $20,700. Over the past 24 hours, the main cryptocurrency first fell by 1.4% ($20,500), after which it quickly grew to $20,800 and began its downward movement again.

What is the short squeeze that took place on October 26th? This is a phenomenon in which crypto market participants from all over the market begin to massively close their transactions on short positions (for sale), buying bitcoin at a higher price and remaining at a loss. A lot of buying triggers stop losses on short positions or force close positions through liquidations, which leads to a very rapid increase.

A similar situation was at the end of 2020.

Back then, people were holding short positions and were set for a bearish scenario. However, most positions were closed between $10,000 and $20,000, resulting in a short squeeze, and a couple of months later, the crypto market turned bullish and started setting records in April and May when Bitcoin almost reached $70,000 and Ethereum exceeded coveted threshold of $4,000. Probably this time, in a short time, we will be able to see the market turn and watch the beginning of the bullish scenario.