Crypto Market Surges Past $3 Trillion Amid ETF Buying and Short Squeeze

The total cryptocurrency market capitalization has surged by over 5%, nearing the $3 trillion mark for the first time since mid-January. This significant resistance area was previously reached when Bitcoin peaked at around $93,000.

Traders have liquidated a substantial amount of short positions, with more than $900 million being closed on September 21st alone. This marks the strongest single-day short squeeze in over a month.

The previous major squeeze occurred on August 21st, when traders closed over $1.25 billion in short positions. Following this event, Bitcoin remained below $80,000 for nearly four weeks.

While short covering may drive prices higher rapidly, demand for the asset may not last long. ETF flows have turned positive, with $1 billion in net inflows on September 21st, forcing leveraged shorts to close and creating upward momentum.