Crypto futures traders going short suffered heavy losses on Wednesday as prices jumped. Over $60 million in short positions were liquidated in the past four hours.

Bitcoin was trading near $29,700 just before 11 a.m. EDT, up about 4.8% since midnight, according to Binance data via TradingView. The broader crypto market traded higher, in line with the leading cryptocurrency by market cap. Ether is up 7% over the past day, Binance's BNB gained 3.5%, and Cardano's ADA gained nearly 9%. The rapid increase in price has been attributed to increasing U.S. banking woes.

The movement hit short traders, with $62 million in short liquidations. Binance and OKX experienced most of the volume, with over $17 million each. 

Short liquidations in the past four hours. Source: Coinglass

Short positions across derivatives exchanges saw the largest liquidations this year just two weeks ago. Around $240 million in shorts were liquidated on April 14, according to Coinglass data via The Block. In the past 24 hours, nearly $150 million in shorts have been liquidated. 

Crypto stocks, such as Coinbase and MicroStrategy, were also in the green — up 2.5% and 7.6%, respectively.

Banking woes, bitcoin gains

The upward price action "closely resembles the market dynamics observed during Silicon Valley Bank’s collapse, namely, a bitcoin-led crypto rally as expectations for future rate hikes reverted sharply lower as more cracks in the regional banking system emerged," GSR's Matt Kunke told The Block.

"Only this time, the narrative shift stemmed from a larger-than-expected decline in First Republic deposits, which turned the balance sheet upside down and will be extremely difficult to recover from."

The bank saw $72 billion in outflows during the quarter. It's advisers are lining up potential purchasers, according to CNBC, asking other U.S. banks to purchase bonds (at a loss) in the bank to prop it up. On March 17, JPMorgan and other major U.S. banks deposited $30 billion at First Republic in an attempt to steady the ship. The bank needed much more, considering net outflows were still above $70 billion despite this injection. 

BTCUSD price action, source: TradingView

Banking issues in the U.S. acted as a catalyst for bitcoin's last rally and a return to the cryptocurrency's core use case, Standard Chartered said this week. Bernstein analysts argued today that it has re-emerged as a "safe haven asset" during recent banking issues.

"As second-order effects of deposit runs continue (credit freeze, margin pressures, asset quality issues), we expect the banking sector to start revealing cracks, pushing the Fed to debase the dollar sooner. Bitcoin's correlation with gold has shot up (safe haven asset), and the correlation with equities is down, mean-reverting after an elevated correlation over calendar years 2020 to 2022," analysts at the bank wrote.