Short Traders Lose $162M in Hours as Bitcoin Zooms Past $56,000

As Bitcoin, the largest cryptocurrency, soars above $56,000, short traders have lost over $162 million within 24 hours. The price increase follows a steady inflow into spot Bitcoin exchange-traded funds (ETFs).

BTC Liquidation Crosses $190.8M

According to on-chain data from the blockchain analytics platform CoinGlass, Bitcoin’s volatility has triggered a $190.8 million liquidation among long and short traders within the past 24 hours. While long traders have parted ways with only $28.81 million, short traders saw the most liquidation.

Short traders follow the strategy of buying low and selling high. Concerning Bitcoin, these traders earn by borrowing BTC from a broker, selling it at a higher price, and buying it back at a lower price. Earning as a short trader depends on how low BTC drops.

On the other hand, long traders earn when BTC increases in value. The long traders who recently lost over $28 million in BTC likely faced liquidation because they did not have sufficient assets in their trading accounts to meet a margin call after BTC saw mild volatility.

Why is Bitcoin Increasing?

Within the last 24 hours, BTC’s value has soared by about 10% to a trading price of over $56,600. At the time of writing, BTC traded at $56,200, representing a 9.7% increase in the last 24 hours.

Source: CoinStats

Bitcoin’s tremendous price performance lies in some factors. Prominent among them is the continuous investment in the spot Bitcoin ETFs, an investment vehicle that allows traditional financial companies to buy BTC and offer Bitcoin-backed products to U.S.-based investors.

Since its approval in early January, institutional and retail investors in the United States have poured billions into the financial product. Yesterday’s data showed that 3,281 BTCs were added to BlackRock’s IBIT. Fidelity’s FBTC saw an inflow of 1,028 BTCs. The total BTC influx recorded yesterday was 5,369 BTCs.

A previous report showed that Bitcoin ETFs are soaking up 11x more BTCs than miners can create. U.S. banks are now clamouring for regulatory guidelines that permit them to profit from the spot Bitcoin ETFs.