Short Squeeze Dominates Crypto Liquidations as Fear Index Hits 29

VADODARA, January 28, 2026 — A violent short squeeze dominated cryptocurrency perpetual futures markets over the last 24 hours. Forced liquidations totaled $195.51 million across major assets. Short positions accounted for over 80% of the volume. This daily crypto analysis reveals a classic liquidity grab amid extreme fear.

Investigation: The Liquidation Data Breakdown

According to data from Coinness, Ethereum (ETH) saw $91.32 million in forced liquidations. Short positions constituted 82.31% of that volume. Bitcoin (BTC) followed with $79.06 million liquidated. Shorts accounted for 80.19%.

The outlier was HYPE token. It experienced $25.13 million in liquidations. A staggering 93.59% were short positions. This data indicates a market-wide squeeze against leveraged bears. The cascade likely triggered stop-loss orders and amplified volatility.

Market Context & Historical Precedent

Historically, such skewed short liquidations precede trend reversals. They often mark local bottoms. The 2021 cycle saw similar patterns before major rallies. In contrast, the current environment features a Fear & Greed Index score of 29.

That score signals extreme fear. It aligns with capitulation events. Underlying this trend is high leverage in perpetual futures markets. Traders over-extended short bets. A rapid price bounce then forced them out.

Related Developments: This volatility occurs alongside other macro shifts. Morgan Stanley's E*Trade listed a Grayscale Bitcoin Mini Trust ETF this week. , South Korea's stablecoin bill has stalled, adding regulatory uncertainty.

Technical Architecture & Price Action

Market structure suggests a significant Fair Value Gap (FVG) formed during the squeeze. Ethereum's price action shows a sharp rejection from the $2,950 support zone. The 4-hour chart reveals a bullish Order Block near $2,900.

On-chain data from Glassnode indicates increased exchange outflows. This suggests accumulation. The Fibonacci 0.618 retracement level from the last swing high sits at $3,150. That level now acts as immediate resistance. The Relative Strength Index (RSI) on daily timeframes remains oversold.

By The Numbers

Why It Matters

This event matters for portfolio risk management. Forced liquidations remove excessive leverage. They create a cleaner market structure. Consequently, institutional capital often enters after such washes. The Volume Profile shows high volume nodes near current prices.

Retail sentiment is deeply negative. That provides fuel for a contrarian move. , the dominance of short liquidations suggests a Gamma Squeeze dynamic. Options market makers were likely forced to hedge by buying spot. This amplifies upward momentum.

Expert Commentary

"The liquidation skew is a classic signal. Markets purge weak hands before reversing. The high short ratio indicates panic covering, not organic selling. Our models show this often precedes a 15-20% rally over the next two weeks," stated the CoinMarketBuzz Intelligence Desk.

Market Outlook & Price Scenarios

Two data-backed scenarios emerge from current market structure.

• Bullish Invalidation Level: $3,250. A daily close above this resistance confirms the short squeeze has evolved into a sustained trend reversal. It would fill the current Fair Value Gap and target the $3,500 zone.
• Bearish Invalidation Level: $2,850. A breakdown below this support invalidates the bullish structure. It would signal the liquidation cascade failed to hold. Next support sits at the $2,700 Fibonacci level.

The 12-month institutional outlook remains cautiously optimistic. Events like these reset leverage. They provide a foundation for healthier growth. For the 5-year horizon, such volatility washes are necessary. They strengthen the market's underlying architecture.