There has been a major short squeeze in crypto markets; the top 500 cryptos have experienced their biggest short liquidation event since early October. Glassnode reveals that the short liquidations of crypto futures and perpetual contracts came close to $200 million, which was mainly due to the price rebound and change of sentiment of investors from fear to greed.

Short Squeeze Causes Market Recovery

The short squeeze resulted from a dramatic increase in Bitcoin’s price; therefore, short sellers to buy back the assets, thus closing their positions to prevent further losses.

For the last 24 hours alone, Bitcoin liquidations made up the majority, with $71 million in shorts being liquidated, followed by Ether with $43 million, and Dash with $24 million.

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Bitcoin Benefits from Geopolitical Uncertainty

Bitcoin’s being able to outperform the US dollar is one of the reasons why the market bounce, back is attributed to it when there is geopolitical tension and the Federal Reserve’s independence is questioned. Nicolai Sondergaard, a research analyst at Nansen, is of the opinion that Bitcoin is gradually getting recognition as an alternative reserve asset and it is therefore benefiting from the increase in geopolitical volatility.

Also Read: Bitcoin Rally Continues with Changpeng Zhao (CZ) Predicting Bold $200,000 Price Target

Market Forces at Play

There are other factors in the market besides those already mentioned, such as a criminal investigation looking into US Federal Reserve Chair Jerome Powell, which might lead to the addition of a “risk premia” layer for Bitcoin. While the cryptocurrency’s price increased by 10.6% year to date, the US Dollar Index (DXY) has only risen 0.75% over the same timeframe.

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