In less than a day, crypto went from election-night panic to a $1 billion liquidation event. Bitcoin fell as low as about $75,633 as US midterm results came in, then wiped out the whole drop and closed above $80,000. Ethereum jumped even harder, rising more than 6% in 24 hours to around $2,421. On the surface it looked like a triumphant return of the bulls. Underneath, the mechanics tell a more careful story: much of this rally was not fresh buyers rushing in, but forced buyers — traders who had bet on further falls and were made to buy their way out.
That distinction matters, because it decides whether a rebound lasts or fades. Here is what happened, how a short squeeze actually works, and what has — and has not — changed.
What happened in 24 hours
According to CoinGlass data reported on 5 November, crypto liquidations totalled $974.80 million in 24 hours as Bitcoin rose 4.64% to $80,480. Short positions — bets that prices would fall — accounted for $575.48 million, or 59%, of that total, while long positions lost $399.32 million. Bitcoin alone accounted for $396.04 million of liquidations, and 78.2% of those were shorts. In total, 128,911 traders were liquidated, with Binance carrying 39% of all liquidations, the largest share of any exchange.
The squeeze was concentrated in a short window. As Bitcoin reclaimed $80,000, roughly $378.09 million in short positions were liquidated in a single hour, about 81% of that hour’s total liquidations, according to CoinGlass figures cited in morning round-ups. The Wall Street Journal reported that Bitcoin had traded as low as $75,633 before closing the day up 2.9% at $80,055, mirroring a rebound in stocks: the Dow rose 3.03% on 4 November, the S&P 500 added 1.58% and the Nasdaq gained 1.44%.
Sentiment flipped with the price. The Crypto Fear & Greed Index, which had sat at 26 — firmly in “fear” — on 3 November and 34 on 4 November, was reported at 42, in neutral territory, after the rebound. That is a swing of 16 points in about two days, which tells you how quickly mood follows price in this market, rather than leading it.
How a short squeeze works, in plain English
A short trader borrows a coin, sells it, and hopes to buy it back cheaper. With leverage, a small deposit controls a much larger position — which also means a small move against the trader can wipe out that deposit. When the price rises instead of falling, the exchange force-closes the position to limit losses. That forced close is itself a buy order. Multiply it by thousands of traders at once, and the buying pushes the price higher, which forces out the next layer of shorts, which pushes the price higher again.
That is a squeeze: a feedback loop, not a vote of confidence. It can be violent precisely because the buyers are not choosing to buy — they have to. And it explains a detail that confuses many newcomers: long traders lost almost $400 million in the same 24 hours. Before the rebound, the election-night dip liquidated leveraged longs betting on a rise. Both sides of a leveraged market can be wiped out in the same day, first one way, then the other. Leverage does not reward being right eventually; it punishes being wrong for even a few hours.
There is a useful warning inside the numbers. One liquidation tracker noted that with 78.2% of Bitcoin’s liquidations coming from shorts, “much of the forced buying behind this rally may be spent”. A squeeze burns its own fuel. Once the forced buyers are gone, the market needs genuine new demand to hold the higher price — and that is where the rest of the evidence is less encouraging.
What has not changed: the ETF money is still leaving
For all the drama in derivatives, the slower, larger money has not yet turned. US spot Bitcoin ETFs recorded about $1.16 billion in outflows over the three trading days from 30 October to 3 November, according to Farside Investors data: $643.2 million on 30 October, $398.6 million on 2 November and $115.6 million on 3 November. Spot Ethereum ETFs lost $85.3 million on 3 November, their seventh consecutive day of outflows.
That is the flow to watch, because it represents investors buying or selling the actual coins through regulated funds, rather than leveraged bets that can be force-closed in an hour. A one-day squeeze does not reverse a three-day, billion-dollar exit; only sustained inflows would. CoinShares research head James Butterfill offered a measured reading of the rebound, saying Bitcoin had largely priced in a Democratic sweep of Congress, leaving room for a relief rally, while slower crypto reform could weigh on US crypto equities. That is a forecast, not a guarantee — and it cuts both ways.
There was one contrasting corporate signal. Strategy continued buying, adding 811 BTC worth about $65.5 million, while also repurchasing $208.2 million of its STRC preferred shares, according to market-desk reporting. Corporate treasuries buying while ETF investors sell is the same split this blog noted on 4 November for Ethereum: different holders, different horizons, different behaviour in a downturn.
The quieter news: Wall Street’s tokenisation march continues
Away from the price action, the week’s most structural story barely moved a price — and that may be the point. Morgan Stanley said on 3 November that it is using the DTCC’s Tokenization Service, launched on 28 October, to put US equities and Treasuries into token form, calling itself among the first banks to do so. The DTCC’s service creates “digital twins”: tokens backed one-to-one by securities its Depository Trust Company already holds in custody, keeping the same CUSIP identifier, holder rights and protections, with DTC remaining the official record keeper. Twenty participants signed up at launch, including Bank of America, Citi and J.P. Morgan, and the service initially runs on the Canton Network and DTCC’s private Besu network, with Stellar and Circle’s Arc expected in 2027.
Two caveats keep this honest. Neither Morgan Stanley nor DTCC disclosed amounts, tickers or a blockchain for the bank’s tokens, so this is adoption of plumbing, not a trading volume story. And Morgan Stanley’s separate plan to support tokenised equities on its own alternative trading system has slipped to the first quarter of 2027, from a previous second-half 2026 target. Tokenisation is advancing through regulated infrastructure, slowly and without retail fanfare — the opposite of a squeeze.
Regulation, meanwhile, remains contested even when it moves. On 3 November, CFTC chairman Michael Selig said perpetual futures on individual US stocks could trade on regulated US exchanges, approved as security futures with the SEC sharing oversight. Hours later, the Capital Markets Alliance, a group backed by Cboe and Citadel Securities, sued the CFTC in federal court in New York, arguing the contracts belong under the SEC and asking the court to overturn the approval. New markets, it turns out, arrive with lawsuits attached.
What to watch next
- Whether ETF flows reverse. One day of inflows would be noise; several days of sustained inflows would be the first real sign institutional caution is lifting. Until then, treat the rebound as derivatives-led.
- Whether $80,000 holds without forced buying. If the price stays above it on ordinary spot volume, the squeeze has handed over to real demand. If it slips back quickly, the fuel was borrowed.
- The next liquidation map. Large clusters of short positions just above the price, or long positions just below it, show where the next forced move could come from.
- Tokenisation volumes, when disclosed. The DTCC story becomes measurable only when banks report how much they have actually converted — not just that they have signed up.
- The CLARITY Act’s next step. With Democrats now holding Congress, the question is whether a revised market-structure bill moves in the new Congress in January 2027, or stalls again at the Senate’s 60-vote hurdle.
A short squeeze is a reminder of how crypto markets actually work: leverage amplifies everything, forced buying can look like enthusiasm, and a green day can arrive without a single new long-term buyer. The rebound above $80,000 is real, and it hurt a lot of traders who bet against it. Whether it becomes a recovery depends on the quieter money — the ETF flows, the corporate buyers and the slow build of tokenised markets — deciding to follow. Watch those, not just the chart.
This post is for information only and is not financial advice. Forecasts are attributed to James Butterfill of CoinShares and other named analysts, and figures are as reported by CoinGlass, Farside Investors, the Wall Street Journal, The Motley Fool and other outlets on 4–5 November 2026; they will change. Cryptocurrency markets are volatile — do your own research before making investment decisions.
