Crypto traders lose 280 million euros after bitcoin price rises

Bitcoin and many other crypto prices have posted nice increases in the past 24 hours. But that party is not for everyone. The increase was caused by so-called short traders face big losses.

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Hundreds of millions in bitcoin liquidations

Out data Coinglass shows that a total of no less than 300 million dollars (280 million euros) in short positions have been liquidated over the past 24 hours. Traders who go short speculate that the price will fall. Traders with bitcoin short positions suffered the biggest losses. Positions worth 177 million dollars were closed there.

The price of bitcoin has risen since yesterday evening by 15% in value. It reached a new annual high of $35,157 on crypto exchange Coinbase. On the Dutch crypto exchange Battle Bitcoin is worth 31,777 euros at the time of writing.

Liquidations of crypto and bitcoin short positions
Heatmap of liquidations of crypto and bitcoin positions. – Source: Coinglass.

The price movement of bitcoin followed a period in which the price had already risen considerably. The recent surge put further pressure on short traders, forcing them to close their positions.

Short positions are liquidated as soon as a trader no longer has enough money in his or her account. This happens automatically in what is also called a margin call is mentioned.

Closing a short position has a positive effect on the price as the underlying bitcoin must be bought back from the market. This can cause a further chain reaction. As soon as the price rises further, even more short positions have to be closed, which in turn causes further buying pressure on the market. This is also called a short squeeze.


Bitcoin ETF hopes one of the causes

The recent increases seem to be mainly caused by euphoria surrounding the arrival of the first American bitcoin spot exchange fund. Such an ETF could create a huge influx of new money by giving institutional investors the option to invest in bitcoin.

Consultancyreus Ernst & Young recently shared an assessment of how much money could flow into the market once the first ETF is approved.

The hope of the arrival of a first ETF also created optimism among major investors worldwide. Data from CoinShares showed this last week a lot of money again has flowed into crypto funds.

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