Over $1B in Crypto Shorts Liquidated on May 8
Key Takeaways
- Bitcoin (BTC) and Ethereum (ETH) experienced massive liquidations – over 1 billion USD on May 8 alone.
- Approximately 80% of the losses affected short positions – a classic short squeeze.
- Technical indicators such as RSI and OBV suggest the market is overheating.
- Rising open interest (OI) and declining buy support could trigger a new wave of liquidations.
- Large investors (“whales”) are beginning to build short positions – a possible sign of a trend reversal.
What Happened?
On May 8, there was a sudden surge in the prices of Bitcoin and Ethereum. This increase triggered what is known as a short squeeze – the forced closing of bets on falling prices. According to data from Coinglass, positions worth nearly 1 billion USD were liquidated. About 80% of these losses were from short positions that had bet on declining prices.
However, long positions – bets on rising prices – were not spared either. A total of 170 million USD in longs were liquidated. This highlights the high volatility and nervousness in the market.
Technical Situation: Overbought and Unstable
The Relative Strength Index (RSI), an indicator used to measure overbought conditions, is in the critical zone for both cryptocurrencies. The On-Balance Volume (OBV), which measures the ratio of buying to selling volume, is also beginning to stagnate. These signals point to a possible exhaustion of the upward movement.
At the same time, open interest – the total volume of open derivative positions – rose by 1.25% to 137.44 billion USD. This indicates an increase in leveraged trading. In an unstable market environment, this can be risky, as price declines could lead to further forced liquidations.
Risk of Liquidations Continues to Rise
Order books show decreasing buy support. If the market comes under pressure again, more long positions could be liquidated. In the past 24 hours, Ethereum longs worth 61.25 million USD were closed. For Bitcoin, over 600,000 USD were liquidated in just four hours.
This suggests that the recent 170 million USD in long liquidations may have only been the beginning. If support levels fail to hold, a new downward wave could follow.
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Large Investors Betting on Lower Prices
Observations from Lookonchain show that a so-called whale – a large investor – recently transferred 13 million USD in USDC (a stablecoin) to the Hyperliquid platform. There, they opened short positions on BTC and ETH. This is a clear signal: some institutional investors are expecting a pullback.
Whether this is a deliberate market manipulation or a hedging strategy remains unclear. What is certain, however, is that the decisions of large investors will significantly influence the future direction of the market.
Our Assessment
The current situation in the crypto market is tense. While Bitcoin and Ethereum are showing short-term strength, technical indicators and the behaviour of institutional investors suggest caution. The increasing use of leverage combined with declining buy support raises the risk of a new wave of liquidations.
If you’re actively participating in the market, closely monitor key support zones. A breakdown of these levels could trigger a chain reaction. At the same time, keep an eye on the activity of large investors – they often provide clues about the market’s next move.
Sources
- Coinglass
- Lookonchain
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