TL;DR:
- A short squeeze in SpaceX perpetual futures led traders to liquidate more than $50 million in short positions in less than 24 hours.
- SpaceX’s implied valuation briefly surpassed $3 trillion on blockchain markets, overtaking Amazon and Microsoft.
- Perpetual contracts traded on Hyperliquid and Binance moved nearly $5 billion in volume during a single session.
A short squeeze in SpaceX perpetual futures rattled decentralized markets in the early hours of Tuesday, when the company’s implied valuation briefly surpassed $3 trillion on blockchain platforms. The episode has clearly exposed both the appeal and the risks of crypto markets that replicate traditional assets around the clock.
The trigger was trader behavior following Wall Street’s close on Monday. SpaceX shares had gained 43% across their first two sessions on the Nasdaq. Faced with that surge, many investors bet on a correction and built short positions in perpetual contracts — instruments that allow speculation on a stock’s price 24 hours a day without needing to hold the underlying asset. However, the contracts kept climbing. Shares had closed at $192.50, but on Hyperliquid the perps prices scaled to around $230 in just six hours.
Traders Defy Wall Street
As prices kept climbing, short positions began to accumulate losses. Funding rates — periodic payments between buyers and sellers to keep contracts aligned with the underlying asset — reversed direction after market hours. Short sellers were paying an annualized rate of 81%. That additional pressure forced many traders to buy back contracts to limit losses, feeding the classic mechanics of a short squeeze.
According to Coinglass data, more than $50 million in short positions were liquidated in less than 24 hours. Across platforms such as Hyperliquid and Binance, total contract volume traded surpassed $5 billion during the same period. Pratik Kala, portfolio manager at digital asset fund Apollo Crypto, explained that the forced buying pressure triggered by liquidations amplified the upward move well beyond any fundamental related to the company’s business.
Markets Without Pause, Risks Without Filter
The episode revealed a structural tension in synthetic equity crypto markets: their continuous operation allows reaction to news when traditional markets are closed, but also amplifies moves that have nothing to do with the fundamentals of the underlying asset. Funding rates add another layer of risk, as they can force abrupt exits and intensify volatility in both directions. Subsequently, perpetual contracts had converged toward SpaceX’s pre-market price, around $203.
