Alert! Cryptocurrency “Short Squeeze” Storm: $376 Million in Short Positions Liquidated in a Single Day

Traders in front of their screens watched the sharp red lines surging on the price charts. One trader at Gate Square wrote: “Margin usage has reached 87.4%—they’re obviously using my position to place their nightmare bets.”

Last night, the digital asset market experienced a classic short squeeze. In the past 24 hours, total liquidations across the network reached $376 million, with more than 82% being short liquidations, amounting to $310 million.

01 Market Turbulence

Over the past 24 hours, the cryptocurrency market saw a brutal short squeeze. Data shows this volatility resulted in a total of $376 million in leveraged positions being forcibly liquidated across the network.

Unlike the recent “long kills long” selloffs caused by market downturns, this was a textbook “major short squeeze.” Of the total liquidations, short liquidations accounted for $310 million, over 82% of the sum.

This market phenomenon is usually triggered by sudden bullish factors, which could be major macroeconomic news, a strong breakout by a leading cryptocurrency, or large-scale institutional buying.

02 Short Squeeze Storm

A short squeeze is a special market occurrence. When an asset’s price rises unexpectedly, traders who bet on a price drop and hold short positions face losses.

As prices climb further, short position holders are hit with margin calls. If they cannot replenish their margin in time, their positions are forcibly liquidated—requiring them to buy back the asset to cover their shorts.

This forced buying itself creates new demand, pushing prices even higher. The more shorts that get liquidated, the faster and more intense the price surge becomes, forming a self-reinforcing avalanche effect that can lead to exponential price increases.

03 Whale Games

During this short squeeze storm, the moves of large traders were particularly notable. According to Hyperbot data, a “stubborn short” whale who shorted BTC four times in a row faced a margin call as Bitcoin rebounded last night.

Currently, their 20x leveraged BTC short position has been reduced to 884.4 BTC, with a liquidation price of $101,294.8 and an unrealized loss of about $6.4 million in a single day.

Meanwhile, other whales are also adjusting their strategies. An address named “pension-usdt.eth” opened a $91 million 3x leveraged BTC short at an average price of $92,000 at 3 a.m. today, quickly becoming the largest BTC short on Hyperliquid.

04 Case Study

Short squeezes are not uncommon in the crypto market and sometimes spiral into controversies due to extreme volatility. In June this year, Gate Exchange’s LAUSDT perpetual contract experienced abnormal price swings.

The contract price surged from $0.5 to $27 in a short period, triggering massive forced liquidations of short positions. Some users suffered heavy losses, with accounts even wiped out and ending up owing the platform $120,000.

Gate Exchange later issued an announcement, admitting the mark price had deviated severely from the normal market price, and took measures such as suspending trading, delisting the contract, and closing positions at market price. The platform also promised to fully cover any negative balance losses.

05 Risk Control

With short squeezes possible at any time, risk management is crucial for traders’ survival. One trader on Gate Square shared his experience: when his margin usage approached 90% and market sentiment was extremely fearful, he chose to close all long positions despite taking a small loss.

“Rather survive than wait for a rebound,” he explained. After closing his positions, he halved his position size, reduced margin usage to zero, and kept $813 in available cash.

This “maintain liquidity during extreme panic” strategy may be one of the most rational choices in response to sudden market swings. Especially in high-leverage trading, having the ability to cope with extreme conditions is much more important than pursuing profit in a single trade.

06 Identifying Signals

To profit from or avoid a short squeeze, spotting early signals is critical. An analysis on Gate Square pointed out that monitoring the ratio of short positions, futures liquidation data, and surges in trading volume during price increases are all effective methods.

When the market experiences a “forced liquidation storm,” it often signals significant price swings and further instability. As seen in last night’s data, 209,216 traders found themselves on the wrong side of trades in just 24 hours.

Leverage is a double-edged sword. In a highly volatile crypto market, even seemingly conservative leverage like 3x can put traders at risk of forced liquidation if there’s a 5% flash crash.

Outlook

On Bitcoin’s price chart, the sharply surging red line has started to slow down. A trader who successfully avoided risk last night wrote on Gate Square: “After closing all my positions, I restarted BTC and DOGE with light positions, cutting my size in half. Now my account is back to a clean state.”

Just a few hours ago, the largest BTC short on Hyperliquid established a new $91 million position. The market never sleeps—the next storm may already be brewing.

Price volatility itself is not the risk; uncontrolled leverage exposure is. Traders who maintain sufficient liquidity during periods of extreme market panic are often the ones who retain the right to choose their battlefield again after a short squeeze storm.