[Analysis] $64M Crypto Shorts Liquidated Amid Extreme Fear Market

• Over $64 million in crypto perpetual futures positions liquidated in 24 hours
• 88.83% of Bitcoin liquidations were short positions as price held $89,109
• Market sentiment at "Extreme Fear" (24/100) despite liquidation squeeze
• Technical structure suggests potential Fair Value Gap between $87,500 and $90,200

NEW YORK, December 29, 2025 — Latest crypto news reveals a significant liquidation event in cryptocurrency derivatives markets, with over $64 million in short positions forcibly closed during the past 24 hours. Market structure suggests this represents a classic liquidity grab amid Extreme Fear sentiment, with Bitcoin maintaining support at $89,109 despite broader market anxiety.

Market Context & Background

This liquidation event occurs against a backdrop of persistent market uncertainty. The Crypto Fear & Greed Index has remained in Extreme Fear territory for multiple sessions, typically indicating capitulation phases. Historical data from previous cycles shows similar short squeeze patterns during sentiment extremes, often preceding trend reversals. The current environment mirrors aspects of the Q4 2021 correction, where aggressive short positioning led to violent liquidation cascades when support levels held.

Related developments this week include upcoming FOMC minutes and jobless claims data that could test Bitcoin's support structure, and an Altcoin Season Index reading of 19 signaling continued Bitcoin dominance during this fear-driven period.

What Happened?

According to on-chain data from derivatives tracking platforms, forced liquidations in cryptocurrency perpetual futures markets totaled approximately $64.94 million over the past 24 hours. The breakdown shows extreme skew toward short positions across major assets. Ethereum saw $28.6 million liquidated, with shorts accounting for 80.75%. Bitcoin experienced $26 million in liquidations, with shorts representing 88.83%. Solana recorded $10.34 million liquidated, with shorts comprising 87.88%.

This data indicates concentrated pain for bearish traders attempting to short into what appears to be a liquidity pool above current price levels. The disproportionate short liquidation percentage suggests market makers and institutional players were actively hunting stop-loss orders clustered around key technical levels.

Technical Analysis & Price Action

Bitcoin's price action shows consolidation around the $89,000 level despite the liquidation event. The 4-hour chart reveals a potential Fair Value Gap between $87,500 and $90,200 that may need filling. Volume profile analysis indicates significant accumulation between $86,000 and $88,000, creating a strong support zone.

The 50-day moving average at $91,200 provides immediate resistance, while the 200-day moving average at $84,500 serves as major structural support. RSI readings remain neutral at 48, suggesting neither overbought nor oversold conditions despite the Extreme Fear sentiment.

Market structure suggests the liquidation event represents a classic order block formation, where aggressive short positioning created an imbalance that was exploited by larger market participants. The Bullish Invalidation Level is set at $86,000—a break below this would invalidate the current support structure and likely trigger further downside. The Bearish Invalidation Level stands at $92,500—a sustained move above this resistance would confirm a trend reversal and potentially trigger a gamma squeeze in options markets.

By The Numbers

Why It Matters

For institutional players, this liquidation event represents both risk and opportunity. The extreme skew toward short liquidations suggests bearish positioning had become overcrowded, creating conditions for a short squeeze. According to data from the Federal Reserve, traditional financial markets remain sensitive to interest rate expectations, making crypto derivatives an attractive hedge—but one with significant liquidation risks.

For retail traders, the data highlights the dangers of high-leverage positioning during periods of market uncertainty. The concentration of short liquidations demonstrates how stop-loss hunting can exacerbate price movements, particularly when sentiment indicators like the Fear & Greed Index reach extremes.

Community Sentiment

Market analysts on social platforms are divided in their interpretation. Bulls point to the liquidation data as evidence of excessive bearishness that typically precedes rallies. "When everyone is positioned for downside, the market often moves opposite," noted one derivatives trader. Bears counter that the Extreme Fear reading justifies caution, suggesting further downside could materialize if macroeconomic conditions deteriorate.

The consensus among quantitative analysts is that the liquidation event has created a cleaner technical picture, with weak hands removed from the market. This often sets the stage for more sustainable moves once direction is established.

Price Prediction / Future Outlook

Bullish Case: If Bitcoin holds above the $87,500 support and fills the Fair Value Gap toward $90,200, a test of the $92,500 resistance becomes probable. A break above this level could trigger a gamma squeeze as options dealers hedge their exposure, potentially pushing price toward $95,000. This scenario would be confirmed by decreasing open interest in short positions and improving sentiment metrics.

Bearish Case: Failure to hold $87,500 support would likely trigger another liquidation cascade, this time targeting long positions. A break below the 200-day moving average at $84,500 could accelerate selling pressure toward $82,000—a key Fibonacci retracement level from the 2024 lows. This scenario would be accompanied by increasing put option volume and sustained Extreme Fear readings.

FAQs

What causes crypto liquidations?Liquidations occur when leveraged positions fall below maintenance margin requirements, triggering automatic closure by exchanges.

Why were short positions disproportionately liquidated?Market structure suggests bearish traders overextended positions during Extreme Fear sentiment, creating crowded trade conditions that were exploited when price held key support.

How does the Fear & Greed Index affect trading?Extreme readings often signal contrarian opportunities, as crowd psychology tends to peak at sentiment extremes.

What's the difference between liquidation and stop-loss?Liquidations are forced closures by exchanges when margin requirements aren't met, while stop-losses are voluntary orders set by traders to limit losses.

Could this liquidation event trigger a broader market move?While significant, $64 million represents a fraction of total crypto market capitalization. The event's importance lies in what it reveals about market positioning and sentiment extremes.

Source Note: Market data and factual reporting in this article are sourced from original reports. Commentary and analysis provided by CoinMarketBuzz.