97.9% of short positions are liquidated. Why is the market collectively bullish this time?

Massive Short Squeeze, Market Sentiment Flips

In the past hour, the entire network experienced $149 million in liquidations. While that sounds like a large number, what’s more noteworthy is the structure: $146 million of short positions were liquidated, while long positions only saw $2.74 million in liquidations. What does this mean? The market underwent a rapid and intense emotional reversal in a very short period.

According to the latest news, in the past 24 hours, a total of 105,156 traders were liquidated worldwide, amounting to $303 million. The largest single liquidation occurred on Hyperliquid’s ETH-USD contract, valued at $30.38 million. This is not ordinary market volatility but a liquidation storm, and the storm’s main victims are those bearish traders.

The Market Story Behind the Data

This comparison clearly illustrates the situation. Over the past few days, data shows that the funding rates across major CEXs and DEXs have been predominantly bearish—between January 21-22, funding rates for BTC, ETH, and SOL on mainstream exchanges indicated a generally bearish market. This suggests many traders were shorting and paying fees for those positions.

But now? These shorts have been collectively liquidated.

Why Did the Short Positions Experience a Massive Liquidation?

From a price perspective, ETH has increased by 1.56% in the past hour and 1.82% over 24 hours, currently trading at $2,988.98. This gain may seem modest, but for leveraged traders—especially those with high leverage—this is enough to trigger liquidations.

Related information indicates that if ETH falls below $2,900, the liquidation strength for longs on major CEXs could reach $874 million; if it breaks above $3,100, short liquidations could reach $646 million. The liquidations within this hour likely resulted from a chain reaction triggered around this price range.

From a market structure perspective, this reflects a phenomenon: previously, the market accumulated a large number of bearish positions, which became extremely vulnerable as prices rose. Once the price broke through a key level, it triggered mass liquidations, pushing prices higher and causing more liquidations—a liquidity wave.

Contrasting with Recent Market Sentiment

The scale of this short squeeze reflects a significant shift in market sentiment. In recent days, data showed increasing BTC deposit inflows (on January 22, CEX net inflow of 7,111.20 BTC), often interpreted as a bearish signal—traders depositing coins on exchanges in preparation to sell. Meanwhile, funding rates were overwhelmingly negative, indicating a generally bearish outlook on major cryptocurrencies.

But now, this bearish consensus has been shattered. The upward price movement directly burst this bearish bubble, forcing short sellers to cut losses and exit.

Summary

The $149 million liquidation within one hour, with 97.9% being shorts, is not just a simple market fluctuation but a clear signal of a sentiment shift. It indicates:

• The market previously accumulated excessive bearish consensus and short positions
• The sudden price rise triggered the liquidation of these vulnerable positions
• The liquidations further pushed prices higher, creating a feedback loop

From a trading perspective, such an extreme liquidation structure often signals that the market may be reassessing its direction. Whether a sustained rebound will follow depends on subsequent trading volume and capital flow, but at least for now, the market has sent a clear signal: the bearish consensus is no longer as firm.