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Bitcoin, ether and solana climb as another $1 billion shorts get wiped out
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- DeepHorus
Major cryptocurrencies, including Bitcoin, Ether, and Solana, surged dramatically as a massive wave of short liquidations fueled a mechanically driven rally. Over two days, more than $4 billion in bearish crypto bets were forcibly closed, marking a significant market event. This cascade of forced buying pushed prices sharply higher, with Bitcoin climbing above $77,000.
The liquidation storm was preceded by a record-setting Thursday, where over $3 billion in short positions were wiped out—the largest single-day figure in records dating back to 2021. The subsequent $1.2 billion in liquidations on Friday brought the two-day total to approximately $3.8 billion. This process occurs when traders, betting on price declines, are automatically closed out by exchanges as losses mount, forcing them to buy back the assets.
Bitcoin led the advance, rising about 8% in 24 hours to trade above $77,000 in European sessions. Over the past week, its price has surged 22%. Other major coins followed suit; Ether gained nearly 5% to $2,350, Solana rose over 5% to just under $90, and Dogecoin jumped almost 9%. The exchange token Hyperliquid's HYPE also saw a significant weekly gain of nearly 27%.
Analysts note this rally is distinct because it is largely built on market mechanics rather than fresh investment demand. The forced buying from short covering created a self-reinforcing loop, where each closure pushed prices higher, triggering more liquidations. This type of rally can be volatile and less sustainable than one driven by fundamental buying interest.
The backdrop for the surge includes supportive macroeconomic and political signals. The U.S. Treasury's decision to double the size of its long-end bond buybacks eased financial conditions, boosting appetite for risk assets like crypto. Additionally, political support emerged, with President Donald Trump urging Congress to advance the Digital Asset Market Clarity Act.
Despite the strong weekly performance, Bitcoin's market capitalization of $1.5 trillion remains about 40% below the record high above $126,000 set last October. The event highlights the ongoing volatility and interconnectedness of crypto derivatives markets with spot prices. Traders will now watch to see if the rally can consolidate gains without further extreme liquidation events.
