Over $10B liquidated from crypto market in past 2 weeks as historic short squeeze reshapes sentiment

The crypto derivatives market just had its most violent two-week stretch in years. Approximately $9.71 billion in positions were liquidated across the market over the past 14 days, with the overwhelming majority coming from traders who bet prices would fall.

The squeeze that broke the bears

The carnage started on August 19-20, when a single-day liquidation event wiped out between $2.7 billion and $3 billion in short positions. That makes it the largest concentrated liquidation of shorts since November 2021, back when Bitcoin was coming off its all-time high and the market was a very different animal.

Shorts accounted for roughly 92% of the total liquidations during that peak window. More than $1 billion in short positions evaporated in just one hour during the most intense stretch.

Bitcoin was the main character. The price surged from intraday lows around $64,100 to peaks exceeding $71,000-$72,000, levels not seen since early June. Ethereum wasn’t far behind in terms of pain inflicted on bears.

According to CoinGlass data, Bitcoin shorts alone made up about $1.37 billion of the liquidations during the critical 24-hour window. Ethereum shorts contributed another $1.01 billion. The remaining liquidations spread across altcoin positions, though Bitcoin and Ethereum dominated the wreckage.

Among exchanges, Binance absorbed the heaviest blow, reporting $518 million in short positions wiped out within a single session. Hyperliquid followed closely at $513 million, and Bybit recorded $303 million. These three platforms bore the brunt of what multiple reports described as the largest forced short-covering event in crypto derivatives history.

How a feedback loop turned a rally into a rout

Short squeezes work like financial dominoes. When prices rise, traders holding leveraged short positions face margin calls. If they can’t add collateral, exchanges automatically close their positions by buying the underlying asset. That buying pushes prices higher, which triggers more liquidations, which creates more buying pressure.

Bitcoin had spent weeks consolidating in the low-to-mid $60,000 range, breeding complacency among shorts who assumed the ceiling would hold. When the breakout came, the market had built up enough dry kindling to fuel a bonfire.

Macroeconomic tailwinds added accelerant. The US Treasury’s bond buybacks compressed yields during this period, providing a supportive backdrop for risk assets more broadly.

As the initial liquidation cascade unfolded on August 19-20, the momentum carried through the rest of the week. Cumulative short liquidations reached approximately $7 billion in the seven days following the squeeze, as residual bearish positions continued to get picked off by the sustained rally.

The spread of liquidations across Binance, Hyperliquid, and Bybit also highlights how decentralized perpetual platforms are now absorbing exchange-level volumes during stress events. Hyperliquid’s $513 million in liquidations, nearly matching Binance’s $518 million, suggests the competitive landscape for derivatives trading has shifted meaningfully since the last cycle’s major liquidation events.