Ether Shorts Dominate Futures Trading Observe $200 Million in Liquidations

In response to the U.S. Federal Reserve's decision to increase interest rates, crypto markets surged.

As expected, the U.S. Federal Reserve boosted interest rates by 75 basis points over the past twenty-four hours, causing a surge in cryptocurrency markets. Following the Fed's statement, Bitcoin (BTC) surged 10 percent at one point, while ether (ETH) surged as much as 16 percent.

The total market capitalization surged by 6.4%, one of the largest advances in recent weeks, as investors' appetite for risk returned in anticipation of future rate cuts. Ether led increases among major cryptocurrencies, with Solana's SOL, BNB, and Cardano's ADA gaining 6.4% during the past twenty-four hours. Across the board, Uniswap's UNI and bitcoin cash (BCH) gained up to 21 percent.

The upward rise generated roughly $200 million in short trade liquidations and over $175 million in long trade liquidations. During seventy-two percent of all liquidated trades had short positions, suggesting that a short squeeze may have contributed to some of the price rises across major cryptocurrencies over the past twenty-four hours.

A short squeeze is a sharp increase in the price of an asset that drives traders who previously sold short to liquidate their holdings, typically resulting in a price increase.

Over 88 percent of traders on the crypto exchange OKX bet on price declines, the highest proportion among competitors.

Short positions are wagers on market decreases, whereas long positions are wagers on price increases. When an exchange terminates a trader's leveraged position due to a partial or total loss of the trader's initial margin, this is referred to as liquidation. It occurs when a trader is unable to satisfy the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).

More than $165 million was liquidated across both short and long positions in ether futures. According to Coinalyze data, ether trade volumes have increased in recent weeks and surpassed those of bitcoin, which led volumes on futures exchanges.

The impending Merge in September, which will transition Ethereum from its present validation process to a proof-of-stake network, is a trigger for larger ether volumes.