Digital Asset Market Rebounds Amid Surge in Short Liquidations

The digital asset market has rebounded strongly after a sharp downturn triggered by statements from former President Trump. This recovery has led to widespread liquidations of short (sell) positions, with Ethereum (ETH) seeing the heaviest losses among short investors. The market’s swift reversal highlights shifting momentum in the cryptocurrency space, as bullish sentiment forces substantial liquidations of bearish bets.

Massive Liquidations Signal Market Turnaround

According to Coinglass data from the 13th, total liquidation volume over the past 24 hours reached $636.08 million (approximately KRW 922 billion), representing a 6.87% increase from the previous day. Breaking it down, $203.47 million (approximately KRW 294.9 billion) stemmed from long (buy) position liquidations, while a substantial $432.60 million (approximately KRW 627.1 billion) came from short (sell) positions.

This sharp contrast underscores the dominance of short liquidations, which more than doubled their long counterparts, at a ratio of 2.13:1. The trend was most pronounced in the top 10 cryptocurrencies, all of which posted significant gains during the period. Liquidations across the board were heavily concentrated on short positions as investors betting on a market downturn faced stark losses.

Ethereum Takes the Spotlight with 12% Rally and Record Liquidations

Ethereum (ETH) emerged as the most significant player in this market shift, rallying 12.33% in just one day and leading in liquidation volume. Short liquidations for ETH reached a staggering $235.21 million (approximately KRW 340.8 billion), accounting for 37% of the day’s total liquidations. Its performance underscores its central role in driving the broader market recovery.

Trailing behind ETH, Bitcoin (BTC) saw liquidations totaling $129.60 million (approximately KRW 187.7 billion), followed by Solana (SOL) at $44.97 million (approximately KRW 65 billion). Ripple (XRP) contributed $15.85 million (approximately KRW 22.9 billion) in liquidations, while Dogecoin (DOGE) added $22.90 million (approximately KRW 33.2 billion). These figures illustrate how widespread the impact was across major cryptocurrencies, reinforcing the bullish shift.

Bitcoin and Solana Shorts Hit Particularly Hard

Bitcoin's (BTC) recovery was notable not only for its rally but also for the disproportionate liquidation of its short positions. Liquidations of BTC shorts hit $99.83 million, more than tripling the $29.76 million associated with long positions. This highlights the challenges faced by traders betting against Bitcoin’s rebound.

Solana (SOL) also delivered a standout performance, surging 12.80% within the day. Liquidations of SOL shorts amounted to $27.14 million, significantly higher than its $17.84 million in long liquidations. Both BTC and SOL demonstrate the scale of losses absorbed by short sellers, as their optimistic counterparts capitalized on the market’s upward momentum.

Trading Volume and Open Interest on the Rise

Overall market activity saw a noticeable uptick in tandem with the rebound. Total 24-hour trading volume climbed 30.63% to $405.6 billion (approximately KRW 587 trillion), indicating heightened investor participation and confidence. Meanwhile, open interest—a measure of the total value of unsettled derivatives contracts—rose by 10.33% to $165.5 billion (approximately KRW 239 trillion), further signaling increased activity in the derivatives market.

Investor Sentiment Inches Towards Optimism

Despite these market rebounds, investor sentiment remains cautious. The Alternative Fear & Greed Index, which measures overall market mood, recorded a score of 38 points, still placing it in the "Fear" category. This marks an improvement from the previous day’s "Extreme Fear" reading of 24 but is muted when compared to last week’s "Greed" level of 71.

The dip from "Extreme Greed" to "Fear" over the course of days points to lingering caution among investors, even as the market signals recovery. The rebound appears to have improved sentiment marginally, but risks remain prominent, keeping significant sections of the trading community wary.

Conclusion: A Market in Transition

The digital asset market’s rebound underscores its volatile and rapidly shifting nature. The liquidation of over $432 million in short positions highlights the risks of bearish strategies in such a dynamic environment. Ethereum’s rally to lead this recovery, coupled with growing trading volumes and open interest, indicates a renewed sense of market activity. However, the cautious undertones in investor sentiment remind us that the crypto market remains unpredictable.

As cryptocurrencies like Bitcoin and Ethereum drive the recovery, the market’s trajectory will likely depend on external factors and investor confidence. For now, the rebound fuels optimism, albeit tempered by the lessons of recent volatility.