Bitcoin rebounds to $64,000, liquidating $320M in shorts

Bitcoin reversed toward $64,000 after falling to about $59,100 on June 5. During a roughly 15-minute span, exchanges liquidated about $320 million of short positions as the price moved higher.

Exchanges closed leveraged short trades that could not meet margin requirements. Those forced buy-backs pushed the price up and triggered additional forced closures in a compressed period.

The short squeeze followed a period of heavy long-side losses. Over the prior week, long positions accounted for about $1.57 billion in liquidations, and data showed hundreds of thousands of accounts were closed over roughly 10 days. Momentum measures indicated the market was deeply oversold; the relative strength index fell to about 16 while prices were near $61,000.

Traders were using high leverage and liquidity was thin at key price levels. When many stop orders cluster near the same prices, a sharp price change can trigger a cascade of automatic closures and rapid swings in either direction.

On perpetual futures contracts, forced short covering can push funding rates sharply positive, increasing the cost of holding long positions. If the rebound continues, remaining short positions could face further forced covers; if prices retreat, stretched long positions could again come under pressure.

Whether bitcoin sustains gains near $64,000 will depend on broader factors, including geopolitical developments and macroeconomic data that contributed to the earlier sell-off.