Crypto markets post $3.5B liquidation event, add $280B in market cap

The crypto market just delivered its most brutal lesson to short sellers since 2021. Over the span of 24 hours on August 19-20, roughly $3 billion in short positions were vaporized as Bitcoin ripped higher, dragging the total crypto market cap up by approximately $280 billion in the process. Long liquidations, by comparison, were a rounding error at around $264 million. This wasn’t a two-sided shakeout. It was a one-directional steamroller aimed squarely at the bears. The anatomy of a historic squeeze Bitcoin broke out of a six-week trading range and surged roughly 8% intraday, peaking at $71,396.50. That marked its highest price since early June, and the move happened with the kind of speed that turns leveraged short positions into dust. At one point, more than $1 billion in short positions were liquidated in a single hour. Liquidation cascades work like this: a trader borrows funds to bet that prices will fall. When prices rise instead, the exchange force-closes the position by buying the asset back at market price. That buying pressure pushes prices even higher, triggering the next round of liquidations. Rinse, repeat, until the leverage is wrung out of the system. According to ...