Crypto Perpetuals Liquidations Hit $294.7M as Shorts Dominate Market Fear

VADODARA, January 6, 2026 — The cryptocurrency perpetual futures market experienced a $294.7 million liquidation event over the past 24 hours, with short positions bearing the brunt of the damage, according to data from Coinness. This daily crypto analysis reveals a market structure where leveraged shorts are being systematically purged, raising questions about underlying bullish conviction despite the apparent one-sided pain. Bitcoin liquidations totaled $186 million, with shorts accounting for 91.26% of the volume, while Ethereum saw $78.27 million (74.91% shorts) and XRP $30.44 million (82.02% shorts). Market structure suggests this is less a coordinated rally and more a liquidity grab targeting over-leveraged bearish positions.

Market Context & Background

This liquidation cascade mirrors the deleveraging events of Q4 2024, where similar short squeezes failed to sustain momentum beyond a few weekly candles. According to on-chain data from Glassnode, perpetual futures open interest has been declining since December, indicating a broader trend of risk reduction. The current event occurs against a backdrop of stagnant spot volumes and a Crypto Fear & Greed Index reading of 44, firmly in "Fear" territory. Historical cycles suggest that such asymmetric liquidations often precede periods of low volatility or trend reversals, rather than explosive bullish breaks. Related developments include Bitmain's significant ETH staking activity and recent volatility in the Fear & Greed Index, highlighting institutional accumulation amid retail fear.

What Happened?

Over the 24-hour period ending January 6, 2026, perpetual futures markets saw total liquidations of $294.7 million, as reported by Coinness. Bitcoin dominated with $186 million, where shorts comprised 91.26% of the liquidated volume. Ethereum followed with $78.27 million (74.91% shorts), and XRP with $30.44 million (82.02% shorts). This data indicates a market where bearish leverage was excessively concentrated, creating a fragile equilibrium. The liquidation engine was likely triggered by a minor price uptick in Bitcoin to $93,609 (a 0.68% 24-hour gain), insufficient to break key resistances but enough to cascade over-leveraged shorts. On-chain forensic data confirms that exchange inflows spiked during this period, typical of forced selling events.

Technical Analysis & Price Action

Bitcoin's price action shows it is consolidating below the $95,000 psychological resistance, having formed a Fair Value Gap (FVG) between $92,500 and $93,500 that remains unfilled. The Relative Strength Index (RSI) on the 4-hour chart is at 58, indicating neutral momentum despite the liquidation event. The 50-day Exponential Moving Average (EMA) at $91,200 provides dynamic support, while the 200-day EMA at $88,500 serves as a longer-term baseline. Volume Profile analysis reveals low volume at current levels, suggesting lack of conviction. Bullish Invalidation is set at $90,800 (Fibonacci 0.382 retracement from the recent swing low), a break below which would signal a failed bullish structure. Bearish Invalidation is at $95,500, above which the market could target the $98,000 Order Block from late December.

By The Numbers

Why It Matters

This event matters because it exposes the fragility of leveraged positions in a low-conviction market. For institutions, the disproportionate short liquidations may indicate a gamma squeeze scenario where market makers are forced to hedge, creating artificial upward pressure. However, the lack of follow-through in spot prices suggests this is not organic demand. For retail traders, it serves as a stark reminder of the risks in perpetual futures, where liquidation cascades can erase positions rapidly. The broader impact ties into macroeconomic factors; as noted in Federal Reserve documentation on monetary policy, tightening cycles often correlate with crypto volatility spikes, though current data is inconclusive on direct causation.

Community Sentiment

Market analysts on X/Twitter are divided. Bulls point to the short squeeze as evidence of underlying strength, with one noting, "Liquidation of shorts clears the path for a move higher." Bears counter that the low spot volume and Fear sentiment indicate a bear trap, with another analyst stating, "This is a classic liquidity grab before a deeper correction." The sentiment is skeptical, with many questioning whether this is a sustainable trend or merely a technical adjustment. On-chain data indicates no significant accumulation by large holders during the event, supporting the bearish narrative.

Price Prediction / Future Outlook

Bullish Case: If Bitcoin holds above the $90,800 invalidation level and breaks $95,500, the market could target $98,000 in the coming weeks. This scenario requires a surge in spot volume and a shift in the Fear & Greed Index toward Greed. Ethereum's upcoming Pectra upgrade, including EIP-4844 for blob transactions, could provide fundamental tailwinds.

Bearish Case: If Bitcoin fails to sustain above $90,800, a retest of the $88,500 200-day EMA is likely. This would confirm the liquidation event as a bear market rally, potentially leading to a drop toward $85,000. The high short liquidation percentage may have exhausted buying pressure, leaving the market vulnerable to a sell-off.