Bitcoin Breaks $118K, Triggers $1B Short Liquidations

Bitcoin’s price rally past $118,000 triggered one of the biggest short squeezes of the year, catching bearish traders off guard and accelerating the move.

Over a 24-hour window, around $1.13 billion in crypto positions were liquidated, with roughly $1.01 billion coming from short sellers. This marked the most significant short-side flush reported for 2025 at the time of the move.

What happened: a liquidation cascade

Liquidations occur when leveraged positions can’t meet margin requirements. When price rises sharply, short positions are forced to buy back (cover), which can create a feedback loop: forced buying pushes price higher, triggering more liquidations.

Futures frenzy: BTC led the charge

The sharp move was driven by Bitcoin futures, accounting for nearly $590 million in liquidations, followed by Ethereum (ETH) futures at about $241 million. Data trackers also showed a rapid jump in derivatives activity, with open interest rising sharply within hours and positioning flipping more long-heavy.

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The sudden momentum left many traders scrambling to cover shorts, adding further upward pressure as forced buy orders hit the market.

Nearly 237,000 traders liquidated

Based on CoinGlass figures cited at the time, roughly 237,000 traders saw positions closed out. The largest single liquidation reported was an $88.5 million BTC‑USDT short on HTX.

Exchanges hit the hardest

Bybit recorded the largest share with about $461 million in liquidations, with over 93% attributed to shorts.
Binance and HTX followed, with about $204 million and $193 million in total liquidations, respectively.

How short liquidations can amplify rallies

A short position profits if price falls. But if price rises, losses can grow quickly—especially with leverage. To limit risk, exchanges automatically close positions once margin thresholds are breached. That forced close typically executes as a market buy, which can:

Increase immediate spot and/or futures buying pressure
Push price into other traders’ stop-loss and liquidation levels
Drive a rapid, self-reinforcing “short squeeze”

Broader market optimism lifted altcoins

Bitcoin’s move happened alongside broader risk-on sentiment across crypto markets, supported by factors traders were watching closely:

Policy and regulatory signals (including ongoing debate around market structure and oversight)
Strength in tech equities, which often correlates with crypto risk appetite
ETF flow narratives that can influence expectations for demand

Other large-cap tokens such as XRP, Ethereum, Dogecoin, and Solana (SOL) also posted gains (reported up to ~5% in the same window), contributing to a broader upswing.

EU angle: what this highlights for European traders

For readers in the EU, this episode underscores how quickly leverage can reshape market moves—especially on perpetual futures and high-leverage products. While the EU’s MiCA framework is raising the bar for crypto-asset service providers operating in Europe, many derivatives venues used by EU residents may be based outside the EU or offered via cross-border arrangements.

Check platform status and protections: Not all venues provide the same investor protections, disclosures, or complaint pathways.
Understand liquidation mechanics: Funding rates, maintenance margin, auto-deleveraging (ADL), and insurance funds can materially affect outcomes during volatility.
Risk can be amplified in EUR terms: Even if BTC is quoted in USD/USDT, EU users often measure performance and tax obligations in EUR, adding FX considerations.

FAQ

What does “$1B in short liquidations” actually mean?

It refers to the notional value of leveraged positions that were forcibly closed by exchanges when traders couldn’t maintain required margin. It’s not the same as “$1B of fresh buying,” but it often involves forced buy orders that can intensify a rally.

Why do short squeezes happen so fast in crypto?

Crypto markets are highly leveraged and trade 24/7. When price jumps, clustered liquidation levels and stop orders can trigger automatically, creating rapid cascades—especially in perpetual futures.

Does MiCA stop these liquidation events in the EU?

No. MiCA improves rules for many crypto services offered in the EU, but it doesn’t remove market volatility or the mechanics of leverage. Liquidations can still occur, and exposure may depend on the product type and where the platform is regulated and operated.

Key takeaways

Bitcoin’s move above $118,000 coincided with roughly $1.13B in liquidations, dominated by shorts (~$1.01B).
Forced short covering can accelerate price rises via a liquidation cascade.
BTC and ETH futures led liquidation totals, with major impacts across top exchanges.
EU traders should pay close attention to platform jurisdiction, leverage terms, and liquidation rules—especially when using derivatives.