The crypto market's strong rebound triggered nearly $500 million in short liquidations, with Bitcoin and Ethereum leading the rally, signaling a key bullish trend
February 26 News: The cryptocurrency market has shown a significant rebound over the past 24 hours, with the total market capitalization increasing by approximately 4.29%. Mainstream digital assets generally rose, and market risk appetite has been restored accordingly. Along with the price recovery, a large-scale short squeeze has rapidly spread, with total liquidations reaching about $576 million, of which over $468 million were short positions, becoming one of the key drivers of this upward movement.
In terms of performance structure, mainstream assets performed notably. DOGE rose about 9.1% in a single day, STETH increased by 8.83%, and ETH gained approximately 8.75%, re-breaking the $2,000 mark, indicating a renewed capital flow into mainstream crypto assets. BTC also recorded a gain of about 4.7%, briefly touching around $70,000 during the session, then slightly retreating to the $68,000 range, reflecting a market characterized by short-term rebound momentum and short squeeze effects.
Derivatives data shows that over 120,000 positions were forcibly liquidated during this rally, with BTC liquidations approaching 40% of the total, about $194 million in short positions; ETH liquidations totaled approximately $203 million, with shorts dominating. This chain reaction of liquidations triggered by price increases is a typical “short squeeze,” where leveraged short positions are passively covered, further pushing prices higher.
Research firm XWIN Research Japan pointed out that the open interest has significantly decreased from previous highs, indicating the market is in a deleveraging phase. Recent volatility has mainly stemmed from derivatives liquidations and position resets rather than large-scale sell-offs in the spot market, which has somewhat alleviated systemic downward pressure. Meanwhile, the capital flow ratio remains low, suggesting limited short-term selling pressure, but also no strong structural buying has emerged.
Analyst Darkfost emphasized that if spot trading volume does not continue to expand, relying solely on liquidations to drive the rally will be difficult to sustain a long-term trend reversal. The current crypto market rebound is more akin to a technical correction stage. Future trends will depend on spot demand, institutional capital flows, and changes in derivatives leverage levels to determine whether a new bull cycle has begun.
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