Bitcoin jumped 5% to $81,000 as $140 million in short positions were liquidated across crypto derivatives markets, triggering a self-reinforcing short squeeze. Spot Bitcoin ETFs pulled in over $1 billion during the same stretch, while easing Fed rate hike expectations and stronger US economic data added further momentum. Ether, XRP, and BNB posted notable gains as the rally spread across altcoins.
Bitcoin ripped 5% higher to touch $81,000, fueled by a cascade of short liquidations totaling $140 million across the crypto derivatives market. Traders betting on lower prices got caught offside, and their forced buybacks became fuel for the rally, feeding the cycle further.
The Short Squeeze Mechanics
Short liquidations occur when traders holding bearish leveraged positions can't meet margin requirements as prices rise, forcing exchanges to close the positions by buying at market price. In certain sessions during the rally, short positions accounted for roughly 80% of total liquidation volume, hitting hardest on Binance, Bybit, and Hyperliquid. One violent session saw $280 million of a total $409 million in liquidations come from shorts alone, a stretch Glassnode flagged as its largest single-day short liquidation event since it began tracking the metric in 2019.
The short squeeze did not happen in a vacuum. Bitcoin spot ETFs saw at least $232 million entering on a single day. Cumulative inflows over several consecutive days topped $1 billion. US Treasury bond buybacks also helped push yields lower, making risk assets like Bitcoin relatively more attractive.
Easing Rate Expectations Lift Risk Appetite
Bitcoin also reclaimed $80,000, trading at $80,270.69 and up 2.9% over 24 hours, as easing Fed rate hike expectations lifted risk assets across markets. The rally got extra support from stronger-than-expected data, with the ISM Services PMI coming in at 55.4, above the 54.3 forecast. Traders are now watching September 11, the next US inflation report, as the next major catalyst.
Altcoins Join the Rally
The move rippled across the market: more than $140 million in shorts got wrecked in the past hours alone. Nearly 110,000 traders were wiped out in a single day. Ether climbed to almost $2,500 after a 2.6% surge in the past 60 minutes. XRP gained 9% on a daily scale, and BNB rocketed past $720.
Beneath the price action, on-chain data shows long-term holder supply increasing even as exchange balances decline, a pattern that typically indicates accumulation rather than distribution.
Sources: Crypto Briefing, CryptoPotato, Coinpedia Fintech News
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