A below-expected annual U.S. CPI reading triggered a market rally that wiped out bearish leveraged positions in a rapid short squeeze.
Crypto markets rallied after the annual U.S. CPI reading came in below expectations, triggering $132 million in short liquidations over the past 30 minutes. The move points to a sharp unwind of bearish leveraged bets as prices rose quickly following the inflation data. In crypto derivatives markets, liquidations occur when exchanges forcibly close positions after traders can no longer meet margin requirements, and large clusters of short liquidations can amplify upside momentum in a short squeeze.