Bitcoin price spike triggers unprecedented short liquidations, breaking August record

The crypto market witnessed remarkable short liquidations on Nov. 6, with $427 million worth of short positions liquidated across major exchanges, including Binance, BitMEX, Bybit, FTX, Huobi and OKEx. This marks the largest single-day short liquidation event since we began tracking this metric in May.

The liquidation cascade coincided with Bitcoin's sharp price movement from $69,480 to $75,670, representing a 9% increase in the 24 hours following the U.S. elections. This event significantly surpassed the previous record of $266 million set in August, representing a 60% increase over the former high. The August record of $266 million stood for nearly three months.

Open interest in Bitcoin futures has shown resilience, climbing from $31.64 billion on Nov. 4 to $36.86 billion currently, suggesting continued market engagement despite the liquidation event.

The amount of open interest has far exceeded levels from the last cycle, where we had peaks of $22 billion and $24 billion. However, as the industry grows and more investors enter the market, the amount of open interest it can sustain also rises. 

The liquidation volume exceeded the total daily average by approximately 3x compared to October's figures.

The sustained growth in open interest following this liquidation event suggests the futures market continues to function as an essential mechanism for price discovery. As institutional participation in crypto markets matures, these derivative instruments provide valuable signals about market positioning and sentiment as we head into uncharted territory.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.