More than $246 million in crypto futures positions were wiped out in a single day as Bitcoin rallied sharply on Thursday, punishing traders who had bet against the market.
The major cryptocurrency rose about 4.5% in 24 hours to about $73,300 after a series of sell-offs pushed its price into the low $60,000 range.
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This move had the characteristics of a short squeeze. Funding rates had turned significantly negative in the days leading up to the reversal, indicating that bearish bets had been piling up on the exchange. When prices started rising, those positions were forced to close. Volume soared and the rally was self-sustaining.
Buyers intervene in the face of huge resistance
Before the buyers made their move, Bitcoin was trading near $71,500. At the time of publication, the price was around $72,900, according to a report from trading data firm TradingView.
The recovery comes as broader risk appetite returns to financial markets, with the S&P 500 rising and the U.S. dollar weakening, conditions that have historically drawn capital to alternative assets such as Bitcoin.
Institutional demands also played a role. Inflows into spot Bitcoin exchange-traded funds (ETFs) helped put a price floor in place during the sell-off earlier this year, keeping losses shallower than they otherwise would have been.
This move marks a notable change from past cycles, where Bitcoin often fell in tandem with stocks during periods of stress.
Geopolitical tensions in the Middle East have increased uncertainty throughout the week, but Bitcoin has held steady, with traders pointing to this fact as evidence of its widespread market acceptance.
Open interest remains high at $48 billion
The derivatives market remains sluggish. Open interest on major exchanges stands at nearly $48 billion, with CME Bitcoin futures alone accounting for about $7.9 billion, or about 110,000 BTC, according to data compiled by Coinglass.
Positioning has shifted towards call options ahead of the move, suggesting that some traders were already expecting a rise.
This level of open interest goes both ways. This reflects strong participation and genuine belief from both individual traders and institutional investors.
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But it also means the market remains vulnerable to sharp fluctuations if headlines change rapidly. A single piece of macro news, such as a signal from the Federal Reserve, an escalation abroad, or a change in policy, can quickly change the mood.
Bitcoin has at least partially shed its old reputation as a pure risk-on transaction. Proponents increasingly frame it as a store of value in an environment of free government spending and a depreciating currency.
Whether that framework holds up under pressure is still an open question, but Thursday’s recovery did little to discourage those who believe in it.
Featured images from Pexels, charts from TradingView
