Chainlink, one of the most popular Defi Tokens as of late, has suddenly climbed high enough to begin liquidating quite a few Short contracts, one trade alone was liquidated at $11.79 with over $21 Million put down, and another $15 Million borrowed. $36 Million liquidated, and the price went up to hit just under $14 per token.
It is said that HUNDREDS of millions of dollars were liquidated in minutes during this short squeeze.
During a short squeeze, as the price jumps up to the liquidation price, some investors start going long to hedge against their loss. The loss here can be HUGE, as we are talking about options trading on Margins, where tokens are bought at 100 per block, with borrowed money. The investors going long causes the price to get drived up even more, as we saw here, where the price went up over 50% from $9.17 up to $13.79.
All short positions that were on the table under that price have been liquidated, or are about to be. So that explains the sudden jump in price. Even though the market sentiment may seem bearish at this moment, it is hard to want to short a coin shooting up in price at this velocity.
It is said that HUNDREDS of millions of dollars were liquidated in minutes during this short squeeze.
During a short squeeze, as the price jumps up to the liquidation price, some investors start going long to hedge against their loss. The loss here can be HUGE, as we are talking about options trading on Margins, where tokens are bought at 100 per block, with borrowed money. The investors going long causes the price to get drived up even more, as we saw here, where the price went up over 50% from $9.17 up to $13.79.
All short positions that were on the table under that price have been liquidated, or are about to be. So that explains the sudden jump in price. Even though the market sentiment may seem bearish at this moment, it is hard to want to short a coin shooting up in price at this velocity.