Key Insights
- The crypto market has just seen one of its most brutal 24-hour liquidation events for the year.
- Data from Coinglass shows that crypto traders suffered over $1.2 billion in long liquidations under 24 hours.
- Most of this decline came from US President Donald Trump announcing sweeping new tariffs on 185 countries on Sunday.
- While the crypto liquidation figures have been brutal so far, they were nothing compared to the Wall Street bloodbath.
- According to the S&P Dow Jones Indices , the global stock market lost nearly $8 trillion in value over two sessions.
- The Kobeissi Letter notes that the market could be in for a “temporary bounce.”
The crypto market has just seen one of its most brutal 24-hour liquidation events for the year.
According to data from Coinglass, cryptocurrencies like XRP, Solana, Ethereum and even Bitcoin have plunged by double digits, as nearly $900 million in crypto futures positions have been liquidated.
This has sent shock waves across the digital asset space.
However, this isn’t a crypto-only story. The downturn affected the global market, and here’s a breakdown of what happened and why it matters.
Bitcoin Leads the Drop
The bloodbath started between Sunday and Monday, when Bitcoin fell below the critical $78,000 mark late Sunday.
The flagship cryptocurrency shed around 6% to trade at around $77,730, with Bitcoin reminding investors once again of how tightly it moves in sync with the broader crypto market.
Ethereum followed Bitcoin with a 12% drop, with a steep crash underneath the $1,600 zone.
However, the altcoins suffered even worse declines, with XRP and Solana each losing up to 14% of their value.
Dogecoin, BNB, Cardano and other mid-cap altcoins were also not far behind either.
By Monday morning in Asia, the markets had only slightly recovered with the market being done already.
$840M in Liquidations Rock the Market
Data from Coinglass shows that crypto traders suffered over $1.2 billion in long liquidations under 24 hours.
Considering how these long positions were bullish bets that the market would rise, a liquidation spree of this size shows that the market got it mostly wrong as a whole.
Bitcoin longs in particular saw around $322 million wiped out, with Ethereum bulls losing a similar $290 million.
The altcoins saw more than $400 million in liquidations, with XRP and SOL futures losing a staggering $80 million.
More than 85% of the total open futures positions were long, showing that investors expected Bitcoin to continue further up and even reclaim the $90,000 zone.
Instead of this happening, however, they were met with forced sell-offs as the market reversed painfully.
What Really Happened? Trump Tariffs and Global Recession Fears
While the crypto liquidation figures have been brutal so far, they were nothing compared to the Wall Street bloodbath.
The sell-off across both defi and trad-fi ecosystems was part of a broader market panic triggered by reports from the US.
On Sunday, US President Donald Trump announced sweeping new tariffs on an eye-popping 185 countries.
This policy move sparked fears of a global trade war, and investors began pulling funds out over fears of a global recession.
The Equity markets in particular responded immediately and violently.
The stock heatmap | Source: TradingView
The S&P 500 futures dropped nearly 6%, with the Nasdaq following with a similar crash.
The Dow Futures came in with a close 5.5% crash, along with brutal crashes from Japan’s Nikkei 225 and Taiwan’s Taiex with 8.9% and 10% crashes, respectively.
According to the S&P Dow Jones Indices
, the global stock market lost nearly $8 trillion in value over two sessions, edging out whatever losses the crypto market endured.
The US alone accounted for a staggering $5.87 trillion of this figure, as investors panicked around the world.
Panic Selling Reaches a Tipping Point
It appears that the bloodbath might not be over yet. Retail investors and institutional ones continue to scramble towards de-risking, with retail traders selling $1.5 billion in equities within 2.5 hours on Friday.
This stands as the largest intra-day outflow ever recorded, with institutions following suit and pulling funds out in the sharpest capital exit from U.S. equities in years.
According to data from the VIX index (the Wall Street equivalent of the fear and greed index), the “fear” sentiment across the global markets has now surged past levels not seen since August of last year.
Even the so-called safe-haven assets like gold and the Japanese yen have been widely dumped, with Gold futures falling under $3,000/oz.
Despite the absence of bullish sentiment though, some analysts believe that the market is close to a “capitulation” point.
This point refers to anywhere in a bear market, where investors give up entirely in a final (and often sharp) drop before a major recovery.
According to recent insightsfrom The Kobeissi Letter, the market has “lost its orderly nature.”
The Kobeissi Letter also notes that the market is now entering a fear-driven phase. However, despite this, even the worst bear markets tend to see relief rallies as a “temporary bounce” looms.
Is This a Turning Point?
As it stands, the scale of these liquidations, along with the extremely bearish sentiment, could be signs of an incoming correction.
In past cycles, moments like these tend to mark the beginning of a price rebound.
Traders who have been forced out of their long positions will now be looking for opportunities to enter at low prices.
If the buying volume rebounds, the crypto and stock markets could see a short-term relief rally soon.
Still, many continue to argue that any bounce in the near term will likely be tactical and not driven by fundamentals.
Overall, the looming fears of a global recession continue to affect investor confidence negatively.
All eyes remain on the US market, especially with fresh inflation data expected later this week.
If any signs emerge that the economic conditions are worsening (or that the FED might pivot in its response), it could create an even more brutal crash for Bitcoin towards $69,000.
In the meantime, crypto investors should be on high alert for continued volatility.
