10,700 BTC in Shorts Vaporized in a Single Day
Bitcoin's short sellers just got a brutal reminder that crowded trades cut both ways. On February 13, Bitfinex reported that 10,700 BTC worth of short positions were forcibly liquidated on its platform in a single day, marking the largest short liquidation spike the exchange has recorded since September 2024.
The squeeze came as Bitcoin bounced sharply off the $60,000 level on Coinbase, its lowest price since November 2024. After weeks of grinding lower, bears had piled into short positions at scale, betting the drawdown would continue. Instead, the reflexive bounce triggered a cascade of forced closures that wiped out overleveraged positions across the exchange.
For context, the last time Bitfinex saw a short liquidation event of this magnitude was September 20, 2024, when approximately $773 million in short positions were closed across the broader market. The February 13 event signals that the same kind of overcrowded positioning had built up again, and the market punished it with the same violence.
Why Bears Got Trapped at the $60K Line
The setup for this squeeze had been building for weeks. Bitcoin has now fallen 52% from its October 2025 all-time high, entering what Bitfinex Alpha describes as "a regime shift from distribution into a sustained downtrend." Multiple structural supports have been broken: the short-term holder cost basis, the yearly open, and the True Market Mean all gave way during the decline.
That relentless selling attracted a wave of bearish bets. Funding rates across perpetual futures markets trended lower and periodically flipped negative, a classic signal that shorts were paying premiums to maintain their exposure. Polymarket prediction contracts showed traders assigning the highest probabilities to prices at or below $65,000, with odds for a mid-$50,000 drawdown climbing steadily.
But the $60,000 level held, at least temporarily. When price bounced rather than broke, the most leveraged shorts were the first to get margin-called, and their forced buying amplified the rebound, triggering a cascade that produced the 10,700 BTC liquidation spike.
The Leverage Flush Behind the Numbers
The short squeeze did not happen in isolation. It arrived at the tail end of a massive deleveraging event that has reshaped Bitcoin's market structure over the past month.
Global open interest in Bitcoin futures has dropped nearly 50% from its peak, according to Bitfinex Alpha. That is not a minor correction. When half the leverage exits the system, it means the remaining positions carry less systemic risk, but also that the market is thinner and more vulnerable to sharp moves in either direction.
Realized losses across the Bitcoin network surged above $1.2 billion per day during the worst of the sell-off, a level historically associated with late-stage corrective phases. The Bitfinex Alpha report characterizes the recent selling as "persistent, price-agnostic spot selling" rather than liquidation-driven panic, suggesting that the forced closures on Feb 13 were a symptom of an already-exhausted market snapping back rather than a catalyst for further downside.
The $60,000 to $74,000 range now defines the battleground. Below $60,000, Bloomberg reported that a break could "spark a fresh liquidation spiral" as additional long positions face margin calls. Above $74,000, the short-term holder cost basis becomes the resistance ceiling that bulls need to reclaim for any sustained recovery.
What This Means for Traders Holding Leveraged Positions
The 10,700 BTC liquidation event carries several practical lessons. First, the speed of the squeeze demonstrates why overcrowded positioning remains the single biggest risk in crypto derivatives. When everyone is on the same side of a trade, the exit becomes a stampede.
Second, the reduced open interest is a double-edged sword. Lower leverage means fewer cascading liquidations, which should make the market less fragile going forward. But it also means less liquidity, so any directional move, up or down, will be amplified. Traders running leveraged positions on exchanges like Binance, Bybit, or OKX need to account for this thinner order book environment.
Third, for holders using crypto-backed lending products, Nexo and similar platforms will be watching collateral ratios closely. A 52% drawdown from the all-time high means that anyone who posted BTC as collateral near the top is already deep into margin call territory. The hidden cost of holding leveraged positions is not just the funding rate: it is the gap risk when the market moves faster than your stop-loss can execute.
The Broader Signal for Crypto Markets
The short squeeze fits into a wider pattern of market stress. CoinShares data released this week shows that digital asset investment products have now logged a fourth consecutive week of outflows, with $3.7 billion exiting crypto ETPs over the past month. Bitcoin ETFs specifically have seen $1.9 billion in year-to-date outflows, pushing global crypto ETP assets under management down to $129 billion, the lowest since March 2025.
Yet the liquidation data tells a different story from the flow data. While institutional money exits through regulated products, the derivatives market is recalibrating. The leverage flush has reduced fragility. The short squeeze proves that positioning had become too one-sided. And the fact that $60,000 held, for now, suggests that enough organic demand exists to absorb spot selling at that level.
For crypto card users specifically, the volatility matters. Cards funded by crypto balances, whether through stablecoin spending or direct crypto-to-fiat conversion, are subject to real-time price swings that affect purchasing power. A 5% bounce triggered by a short squeeze might look like a trading opportunity, but for someone trying to pay for coffee with a self-custody card, it means the value of their loaded balance just shifted between the time they topped up and the time they tapped to pay.
The stabilization phase that Bitfinex Alpha identifies as emerging could be constructive for everyday crypto spending. Less leverage means fewer exchange disruptions. A defined trading range means more predictable conversion rates. And the purge of overcrowded shorts means the next directional move, whenever it comes, will likely be driven by spot demand rather than liquidation cascades.
FAQ
How much BTC was liquidated on Bitfinex on February 13? Bitfinex reported that 10,700 BTC worth of short positions were forcibly liquidated in a single day, making it the exchange's largest short liquidation event since September 2024.
What triggered the short squeeze? Bitcoin bounced sharply off the $60,000 support level after weeks of declining prices. Overcrowded short positions had built up as traders bet on continued downside, and the reflexive bounce triggered a cascade of forced closures.
How far has Bitcoin fallen from its all-time high? Bitcoin has declined approximately 52% from its October 2025 all-time high, entering what analysts describe as a sustained downtrend with the $60,000 to $74,000 range defining the current battleground.
What does reduced open interest mean for traders? Global Bitcoin futures open interest has dropped nearly 50% from its peak. This reduces systemic risk from cascading liquidations but also means less liquidity, so price moves in either direction will be amplified.
Are crypto ETPs still seeing outflows? Yes. CoinShares data shows a fourth consecutive week of outflows from digital asset investment products, with $3.7 billion exiting over the past month and global crypto ETP assets under management falling to $129 billion.
Overview
Bitfinex data reveals that 10,700 BTC in short positions were liquidated on February 13, the largest single-day short squeeze the exchange has recorded since September 2024. The event was triggered by a sharp bounce off $60,000, Bitcoin's lowest level since November 2024, and reflects overcrowded bearish positioning that had built up during a 52% drawdown from the October 2025 all-time high. Global open interest has dropped nearly 50% from peak, reducing systemic fragility, while CoinShares reports a fourth consecutive week of ETP outflows totaling $3.7 billion. The leverage flush and short purge suggest the market may be entering a stabilization phase, with the $60,000 to $74,000 range now defining the near-term trading environment.
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