Massive Short Squeeze Hits Crypto Market — Overleveraged Traders Face Liquidations as Bulls Push Back

Leverage traders just got burned — and Bitcoin might be ready to roar again.
According to BitcoinWorld.co.in, the crypto derivatives market saw a wave of liquidations in the past 48 hours, as short positions were wiped out across major perpetual futures exchanges.

This sudden liquidation event triggered what analysts call a “short squeeze” — forcing bearish traders to buy back their positions, driving crypto prices higher in a matter of hours.

What Triggered the Liquidations?

Analysts report that the crypto futures market had been heavily tilted toward short positions following recent macro uncertainty and minor price pullbacks in Bitcoin and Ethereum.
When Bitcoin broke above key resistance levels, those leveraged shorts were automatically liquidated by exchanges — creating a cascade of buy orders.

“It’s classic crypto behavior — when sentiment leans too far bearish, the market punishes overleveraged traders,” said one derivatives analyst.

Over $180 million worth of short positions were liquidated across Bitcoin, Ethereum, Solana, and several altcoins within a single trading session.

Perpetual Futures and the Leverage Trap

Perpetual futures (or perps) are popular because they allow traders to speculate on crypto prices without expiry — but they also carry extreme risk.
When funding rates become overly negative (too many shorts), it often signals a potential squeeze setup.

In this latest event, Bitcoin futures funding flipped positive shortly after the liquidation — a sign that bulls are regaining short-term dominance.

“This liquidation flush could set the stage for a fresh rally if momentum sustains,” analysts noted.

Market Reaction: Bitcoin Leads the Charge

Bitcoin briefly surged past $88,000, while Ethereum reclaimed the $2,950 mark, showing resilience after a week of consolidation.
Solana and BNB also bounced, each gaining more than 5% in 24 hours following the liquidation wave.

Traders now believe the short squeeze may ignite a broader bullish reversal, especially if macro sentiment remains stable and ETF inflows stay positive.

“The market just reminded everyone — overleveraging against Bitcoin rarely ends well,” one trader posted on X (Twitter).

Outlook: The Setup for a Bullish Q1

Liquidations often serve as market reset events, washing out excess leverage and creating space for a healthier trend.
If Bitcoin holds above recent breakout zones, analysts expect renewed buying momentum as sidelined traders re-enter.

The squeeze may have hurt the shorts — but it could spark the bulls back to life.