The cryptocurrency market recently witnessed a dramatic surge in Bitcoin (BTC) and Ethereum (ETH) prices, leading to a significant short squeeze that decimated bearish positions. Bitcoin achieved new all-time highs, first reaching $112,000, then $116,500, and later breaching $118,000 during Asian trading hours. Similarly, Ether surpassed $2,990 and subsequently broke through the $3,000 threshold for the first time in months, climbing nearly 9%.

This rapid upward movement triggered a massive wave of liquidations across the derivatives market. According to CoinGlass data, over $1 billion in crypto short positions were liquidated in a 24-hour period, impacting more than 260,000 traders. Specifically, Bitcoin short positions accounted for approximately $570 million to $590.04 million in losses, while Ethereum shorts shed around $207 million. In total, the cryptocurrency market faced nearly $528 million in liquidations in a single 24-hour window, with short investors contributing about 85% of these losses.

The market's overall capitalization spiked by 4.4% to $3.63 trillion following the rally. Crypto analysts and traders reacted to the event, with many noting the intensity of the short squeeze. Miles Deutscher described the sentiment as "Bears in disbelief," while Daan Crypto Trades called it a "MASSIVE Short squeeze on BTC & ETH." The Crypto Fear & Greed Index, though down slightly from the previous week, remained steady at a "Greed" score of 71 out of 100, indicating strong market optimism.

While large liquidation events are not uncommon in the volatile crypto sector, the latest squeeze showed distinct behavior in Open Interest (OI). Glassnode analytics highlighted that unlike previous short squeezes where OI remained depressed after rallies, it quickly rebounded following the initial drop in the latest event. This swift recovery suggests fresh long positioning is entering the market, indicating sustained bullish sentiment.

The bullish wave extended beyond Bitcoin and Ethereum, with several altcoins also posting significant gains. Notable performers included Ethena (ENA) with a 23% increase, Sei (SEI) and Worldcoin (WLD) each up over 22%, and Arbitrum (ARB) rising by 19%. This widespread rally indicates intensified bullish sentiment across the entire crypto ecosystem.

Despite the recent surge, some analysts had previously expressed skepticism about Bitcoin reaching new highs, citing a "lack of follow-through strength" and a need for fresh catalysts. However, others maintained a more bullish outlook, predicting an "inevitable breakout." As the market progresses, approximately $2.11 billion in long positions are at risk of liquidation if Bitcoin retraces to the $112,000 level.

It is important to note that this article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.