A dramatic short squeeze in the cryptocurrency market has triggered over $400 million in liquidations within 24 hours, marking the highest level since October and fueling a powerful rally across major digital assets. According to Coinglass data, total liquidations reached $414.65 million, with a staggering 77.67% ($322 million) coming from short positions. Approximately 109,672 traders were liquidated during this period.
The squeeze was amplified by a single massive liquidation order on HTX, where a BTC-USDT position worth $91.33 million was forcibly closed. The pain was not evenly distributed across exchanges. HTX bore the brunt with $108.35 million in liquidations, 96.05% of which were shorts. Hyperliquid showed an 87.1% short ratio, while Binance recorded $95.65 million in liquidations with a 63.4% short ratio.
The rally appears to have been fueled by a sharp reversal in institutional sentiment. U.S. spot Bitcoin ETFs recorded net inflows of $471 million on January 2, a dramatic swing from the $348 million outflow on December 31. Cumulative net inflows into these ETFs have now reached $57.08 billion, with total net assets standing at $116.95 billion—representing 6.53% of Bitcoin's total market capitalization.
This created a stark divide in market positioning. While retail traders had crowded into short bets, institutional traders held a net long position of 76.52%, suggesting "smart money" anticipated the upside move. The cascading effect of forced short closures created a feedback loop, driving prices higher and triggering further liquidations.
Crypto analyst Ardi noted on X that "short covering frenzy plus volume delta exploding gave Bitcoin its best price action in a long time," observing that nearly $1 billion in shorts had been liquidated over recent days. Bitcoin climbed to trade around $93,700, breaking out of its late-December consolidation. Altcoins posted even stronger gains on a weekly basis, with XRP up 28.8%, Solana up 11.8%, and Ethereum up 9.6%.
The immediate squeeze has now been absorbed, with the 24-hour long/short ratio balancing to near 50/50. Analysts are watching the $94,500 level for Bitcoin, as a close and hold above it could trigger further unwinding of overhead short positions.
