Shorting Bitcoin Wipes Out Entire Fortunes... Short Sellers Face Wave of Bankruptcies

▲ Bitcoin (BTC)

Bitcoin (BTC) triggered a massive short squeeze that wiped out bearish bets in an instant, recording the largest liquidation event since 2024.

According to crypto media outlet NewsBTC on Feb. 16 (local time), $736 million in assets held by investors who had taken short positions anticipating further declines were forcibly liquidated across global exchanges. Darkfost, an anonymous analyst at on-chain analytics platform CryptoQuant, noted that this marked the largest short-position liquidation event since Sept. 20, 2024, when $773 million was liquidated.

The short squeeze occurred shortly after funding rates on major exchanges such as Binance plunged sharply, signaling an excessive concentration of bearish bets. The forced liquidation of accumulated short positions generated significant buying pressure, acting as fuel for Bitcoin’s sharp price increase. Darkfost diagnosed the current market as imbalanced, with derivatives markets crowded by speculative positions while spot market liquidity remains thin.

Amid the liquidation event, Bitcoin is trading at around $69,878, up 1.5% from the previous day. On a weekly basis, it has posted a modest gain of approximately 0.7%, but it remains about 45% below its all-time high of $126,080 recorded in 2025. Experts warned that without genuine demand in the spot market, the rebound driven by the short squeeze may be difficult to sustain over the long term.

In particular, weak spot market demand is casting uncertainty over the current rally. Darkfost explained that while the liquidation of aggressive short positions has heightened upside volatility, prices could face another correction if substantial buying interest fails to materialize. For Bitcoin to transition into a clear upward trend, a strong recovery in spot market demand—rather than speculative movements in derivatives markets—must come first.

Bitcoin now stands at a critical juncture as it tests support levels while attempting to reclaim the $70,000 mark. Although the large-scale liquidation has partially eased overheated bearish sentiment, thin liquidity conditions mean that even small movements could trigger sharp price swings. Investors are advised to maintain a cautious approach and closely monitor the inflow of spot buying interest rather than being swayed by a temporary rebound fueled by a short squeeze.

Disclaimer: This article is for investment reference only and the publisher is not responsible for any investment losses resulting from its use. The content should be interpreted for informational purposes only.