Traders shorting crypto markets have so far had to write off more than $608 million in losses in the last 24 hours, after the majority of cryptocurrencies turned into a spectacular rally not seen in a long time.
Data from CoinGlass according to short traders have lost about $608 million as of this writing (1/14/2022, 2:33 PM). Almost half of the short rect was generated on the OKX crypto exchange with $309 million, followed by Binance with $157 million.
In addition to short sellers, long traders were also caught off guard by the situation, as more than 122 million dollars of long positions have been liquidated so far. With this, the total value of liquidated positions in the last 24 hours increased to more than 731 million dollars, which has not been seen since the FTX crash on November 8th.
The bulk of the record futures liquidation came as major cryptocurrencies broke through key resistance levels, extending their rally. BTC, the world’s largest cryptocurrency by market value, crossed the $21,000 mark in the last 24 hours, while ether scratched the $1,600 mark on some exchanges. The two leading coins are up 10.6% and 8.9%, although the strength of the rally is now starting to wane.
Meanwhile, the activity on the digital currency futures market also rose sharply. As Crypto Quant analyst Ki Young Jun said he notedbuyers hit the market early Saturday morning and generated about $4 billion worth of volume in bitcoin futures markets alone.
The reasons for the rally are unclear, some see favorable US inflation (CPI) data as the background, as new data published by the Labor Department on Thursday indicated a slowdown in inflation, which was positively received by the capital markets, including both stock and crypto markets.
In line with expectations, the US annual inflation rate fell to 6.5% in December, down from 7.1% in November. On a monthly basis, inflation decreased by 0.1%, compared to the previous month’s increase of 0.1%. The consumer price index, which does not take into account highly volatile food and energy prices, fell from 6% in November to 5.7%.
Lower inflation is usually a positive sign for risky asset markets such as crypto, as it could encourage leading central banks to delay rate hikes. Over the past year, the Fed and other central banks around the world have aggressively raised interest rates, creating an unfavorable environment for crypto.