Bitcoin short squeeze wipes out $504M in bearish bets

Bitcoin's recovery from last week's sharp selloff triggered a major short squeeze, wiping out approximately $504 million in bearish positions over 24 hours as traders betting on further declines were caught offside.

According to market data from CoinGlass, total crypto liquidations reached around $655 million and affected more than 104,000 traders, with Bitcoin accounting for roughly $315 million of forced closures and Ether contributing another $201 million.

The largest single liquidation reportedly occurred on crypto exchange OKX, where a Bitcoin futures position worth approximately $12.3 million was automatically closed after moving against the trader.

A liquidation occurs when an exchange forcibly closes a leveraged position after losses exceed a predefined threshold, often accelerating market moves as traders are pushed out of their positions.

The squeeze followed a difficult week for Bitcoin, which briefly fell below $60,000 after pressure from persistent spot ETF outflows, weakness in AI-linked assets and selling linked to corporate treasury activity.

Many traders increased bearish bets near the lows, only to be caught when Bitcoin rebounded to almost $63,800 on Sunday before extending gains to around $63,700 early Monday.

However, the rally later lost momentum as renewed military tensions between Iran and Israel boosted oil prices and weighed on broader risk sentiment, pulling Bitcoin back towards $62,900 ahead of key US inflation data and several high-profile IPOs expected later this week.

At the time of reporting, Bitcoin price was $62,894.33.