While Bybit Bitcoin’s futures had the biggest drop of 15.59% in OI, followed by Binance’s 12% in the past 24 hours, Bitfinex, FTX, and CME had the biggest increase of 12.81%, 11.54%, and 11.86%, respectively.
Bitcoin price surged to nearly $40,000 in a strong upwards move, late on Sunday or early Monday. This represents a nearly 36% jump in price since the $29,300 low last Tuesday.
While several factors like Alameda Research putting in a bottom by “buying a LOT” at the lows, Tesla CEO Elon Musk announced his bullishness for crypto, and speculation over Amazon’s potential involvement in the cryptocurrency sector contributed to this bullish strength, shorts have a significant part to play in this.
As we have been reporting for the past month, the funding rates on the perpetual contracts have been staying in the negative, with the market extremely short on BTC. At the same time, open interest continued to climb sharply.
And finally, an epic short squeeze happened.
— Alex Krüger (@krugermacro) July 26, 2021
In the past 24 hours, 102,558 traders have been liquidated for $1.14 billion, with nearly $945 million of it belonging to shorts, as per Bybt.
The figure is expected to be much higher given that Binance had stopped showing its real liquidation numbers and is currently accounting for less than 20% of all liquidations when it used to be about half, much like Bybit.
“Bitcoin shorts just got blown out. Quarterly basis popped from 5% to >10% briefly,” noted trader and economist Alex Kruger.
Amidst this, Binance and FTX have reduced their leverage offering from more than 100x previously to now only up to 20x. Andrew Kang, Mechanism Capital, said,
“Usually, big short squeezes like we saw on BTC today bleed out, but this continued upward momentum is pretty indicative of shorts/stables being price-insensitive buyers trying to scoop any liquidity they can.”
more shorts liquidated today, than longs in may 19, on cash margined futures pic.twitter.com/vygEkoel8a
— CL (@CL207) July 26, 2021
The result of this short squeeze can also be seen in open interest. Total OI on Bitcoin futures has crashed by 50k BTC — currently at 349.7k BTC from over 400k BTC less than a week back.
In the past 24 hours, OI on Bybit Bitcoin’s futures had the most significant drop of 15.59%, followed by Binance’s 12%, which leads the futures space. OI on Binance is now at 79.1k BTC, down from 101.37k BTC on June 20, which increased 78% in nearly a month as new short positions were opened.
Meanwhile, Bitfinex, FTX, and CME had the most significant increase of 12.81%, 11.54%, and 11.86%, respectively, as of writing.
In the case of Ether, Binance is the only with a decrease, of only about 3.67%, though, in OI. Total Ether OI is now 2.54 million ETH, down from 2.94 million ETH in less than a week. SplitCapital said,
“Make no mistake, the real pain won’t come from shorts rather the absurd amount of people that are parked all in stablecoins. They won’t chase till 40k breaks.”