Short liquidations in the cryptocurrency market have just reached their highest level since July 2021. This marks the largest losses in 18 months for traders who opened shorts (downward positions) on Bitcoin and altcoins over the past few days.
The price of Bitcoin today returned above the key $20,000 level. In addition to the positive sentiment and numerous statements of the end of the bear market, a significant number of traders are recording huge losses today by short liquidations.
Over the past four days – from January 11 to 14 – Bitcoin increased from a bottom at $17,318 to a peak at $21,247. This represents an increase of 22.5%. Also, most of the altcoins are recording double-digit gains this week. The total capitalization of the cryptocurrency market has returned above the $1 trillion level, according to CoinGecko.
BTC/USD chart by Tradingview
Largest Short Liquidations Since July 2021
During the same 4-day period, short liquidations in the cryptocurrency market totaled $916 million. The largest daily volume of short liquidations took place yesterday, January 13, at $448.5 million. In the BTC market alone, liquidations of short positions reached more than $127 million yesterday (red candles).
Source: Coinglass
The long-term bear market has favored traders taking short positions for many months. Moreover, BTC upward movement since the beginning of 2023 has been so strong that it has pierced most potential resistance levels in a single impulse. Bitcoin has surged 29% since January 1, 2023.
Such market conditions have suddenly become highly unfavorable for bears, who are today suffering their biggest losses since July 2021. In a tweet published yesterday, analyst @DylanLeClair_ pointed this out:
It was 18 months ago that the last major recovery in the cryptocurrency market began. It led Bitcoin to the all-time high (ATH) of $69,000 in November 2021. Since then, there has been a long and systematic bear market.
Perhaps today’s breakout of the Bitcoin price and the return of the cryptocurrency market cap above $1 trillion could signal a new upward impulse. The latest readings from on-chain indicators and the narrative of the start of a bull market about a year before the next halving agree.
However, it is worth remembering that even at the $20,000 level, bitcoin is still 70% below its ATH. Therefore, the cryptocurrency market still has a long way to go before it reaches its lost peaks.
For BeInCrypto’s latest crypto market analysis, click here.
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