$2B Crypto Liquidations Trigger Market Sell-Off

According to data from Coinglass, the cryptocurrency market witnessed one of its most severe unwinding events in recent months, with more than $2 billion in long and short positions liquidated over a 24-hour period. This massive liquidation event triggered a sharp sell-off across major digital assets, with Bitcoin crashing as low as $82,000 and Ethereum sliding below $2,700. The scale of the liquidations marks one of the most significant market disruptions since October’s historic crash, sending shockwaves through the trading community and fueling bearish sentiment across the crypto ecosystem.

Traders holding long positions bore the brunt of the damage, with over $1.8 million in long positions wiped out across major exchanges. Bitcoin long liquidations alone totaled approximately $966 million, while Ethereum long positions suffered around $407 million in losses. The largest single liquidation order occurred on Hyperliquid, where a massive BTC-USD position valued at $36.78 million was wiped out. This concentrated liquidation event highlighted the vulnerability of highly leveraged positions in the current market environment, particularly as volatility spiked across major assets including Solana and other altcoins.

The severe sell-off comes ahead of a crucial $4.2 billion crypto options expiry, with more than 39,000 BTC options and 185,000 ETH options set to expire. Market participants have leaned heavily into put positions, signaling expectations of further downside pressure. For Bitcoin, the max pain point sits near $98,000, well above current prices, while Ethereum’s max pain point is around $3,200. This significant options expiry event has created additional uncertainty in an already fragile market environment, with traders positioning for potential further volatility.

Meanwhile, whale behavior has added fuel to the fire. A mega Bitcoin whale who has held BTC since 2011 reportedly sold over 11,000 Bitcoin, worth approximately $1.3 billion, intensifying downward pressure on the market. However, at the same time, other large holders accumulated over $65 million in spot Bitcoin near the $85,000 level, hinting at strategic dip-buying even as volatility spiked. This divergence in whale behavior reflects the mixed sentiment among large market participants, with some taking profits while others see current levels as attractive entry points.

The market’s current instability can be traced back to October’s $19.5 billion liquidation event, which severely disrupted liquidity conditions across cryptocurrency markets. Market makers, still recovering from that historic shock, remain cautious in their operations, creating a fragile environment where even minor price swings can trigger cascading liquidations. This liquidity fragility has been particularly evident in the recent volatility, with relatively small market moves amplifying into significant liquidation events.

Despite the chaos and market stress, signs of resilience emerged from infrastructure players like Solana and Fireblocks, which maintained high transaction speeds and network reliability during periods of unprecedented stress. The ability of these platforms to handle increased transaction volumes and maintain operational stability during market turmoil provides some reassurance about the underlying infrastructure’s robustness. However, as macro uncertainty, ETF outflows, and continued whale behavior shape market sentiment, the crypto market remains firmly on edge, with traders watching closely to see whether this correction deepens or sets the stage for the next major recovery.