In the past 24 hours, the cryptocurrency market has experienced a significant event, with a massive amount of short contracts being liquidated due to Bitcoin's rally above $66,000. According to CoinGlass data, over $135 million in cryptocurrency derivatives contracts belonging to more than 52,000 traders were liquidated, with short holders being disproportionately affected, accounting for $93 million of the total.

This liquidation event, known as a "short squeeze," occurs when a sharp price swing triggers a large number of liquidations, feeding back into the price move and unleashing a cascade of liquidations. In this case, the shorts saw the most liquidations, with 68.4% of the total liquidations involving short contracts. While long contracts also experienced liquidations, totaling over $42 million, the majority of the impact was felt by short sellers.

Bitcoin-related contracts contributed the most to this liquidation event, with $47 million in liquidations, significantly outweighing Ethereum's $16 million and Solana's $12 million. This suggests that speculation around ETH has been unusually low recently. Historically, large liquidations have not been rare in the cryptocurrency market, given the volatility of coins and the prevalence of speculation. Overleveraged positions can be risky, and when volatility emerges, many traders are caught off guard.

The warning signs of liquidations were apparent when the surge began yesterday, with the Bitcoin futures Open Interest showing a rise. This event serves as a reminder of the risks involved in trading cryptocurrencies and the importance of managing positions effectively.