Cryptocurrency prices plunged on Friday, triggering the most severe – and perhaps largest – market sell-off ever.
According to Coinglass data, more than $19 billion in liquidations were triggered over the past day, including $16.8 billion on the long side. The actual figure “is likely much higher” due to the way Binance, which saw significant volume during the event, reports liquidations, Coinglass wrote on X.
Decentralized perpetual trading platform Hyperliquid saw a significant portion of the day’s action: $10.3 billion in liquidations, with $9.3 billion on the long side, per Coinglass.
These developments were fueled by the increasing unwinding of leveraged positions and the collapse of open positions. The price of Bitcoin fell as low as $104,000, with altcoins large and small being hit harder.
Félix Jauvin, host of the Forward Guidance podcast, told me, “This was one of the most complicated liquidation events I’ve seen in a long time. The last one I remember like this was probably in May 2021. With estimates of around $20 billion in liquidations, it’s likely that someone important was executed and there was nowhere to hide other than to scout for a long time.”
“Long leverage? Liquidated. Short leverage? Forced deleveraging via automatic foreign exchange deleveraging (ADL),” he explained. “I hear a lot of stories of people who were short, took profits and bought during the dip, then quickly liquidated right after. It’s a disaster and it will take some time for market makers to replenish liquidity again.”
On-chain activity increased significantly, although some users experienced significant delays amid the chaos. Aave founder Stani Kulechov wrote on
Speculation quickly surfaced on Crypto Twitter regarding as-yet-unknown industrial companies suffering significant losses which, in turn, worsened the rout. Along with these theories, traders have shared accounts of complete or near-total wipeouts of leveraged positions.
“Probably one of the most severe heat flushes I’ve ever seen on alts, I didn’t even realize alts had that much leverage,” Cobie, the long-time cryptocurrency trader and commentator, wrote on Friday
“Don’t let an explosion in leverage dictate your long-term visions. The future is bright, good things to come, patience is rewarded,” he concluded.
The price of Bitcoin has since partially recovered and is trading around $112,200 at the time of writing. The collective crypto market cap is down 9% over the past day, according to Coingecko. Among the altcoins bucking the trend is Zcash, which posted additional post-crash gains after climbing sharply over the previous days and hours.
Some market participants were quick to draw comparisons to the dramatic market declines around Tether/Luna and FTX. These two events proved to be decisive for the market during the last cycle.
Beyond the raw numbers – Coinglass reports 1.6 million traders were liquidated over the past 24 hours – the event demonstrated crypto’s vastly expanded interconnection with global markets and power politics.
The sale appears to be part of a broader reaction to a renewed escalation of U.S. President Donald Trump’s trade war against China. Trump, in two posts on his Truth Social website, declared his intention to impose 100% tariffs in response to a move by China to restrict access to its rare earth materials. The United States would also restrict China’s access to “critical software,” Trump said, according to the New York Times. The main American indices fell following this news, especially after Trump redoubled his tariff threats.
As trade relations between the United States and China have fluctuated between moderate easing and outright hostility since Trump took office, his latest moves have struck at the heart of the largest exchange of goods between the two countries: the software that powers the global AI revolution and the crucial ingredients needed to make the chips that underpin it.
Beyond the macroeconomic implications, the Trumpian roots of the crypto market turmoil could prove more far-reaching than the losses themselves.
Nearly 10 months into his second term, Trump and his family have fully embraced the industry — personally, professionally and politically. The industry has also embraced Trump, pouring millions of dollars into the Republican Party’s campaign coffers.
In return, the Trump administration promoted industry-friendly policies and ended an era of oversight under former President Joseph Biden that prioritized regulatory pressure and legal combat. Congress passed landmark regulations on stablecoins, and despite disputes between Republicans and Democrats, lawmakers will likely also enact market structure reforms in the future.
Yet Friday’s events confirm that, despite the favorable treatment, the crypto market is not immune to Trump’s geopolitical whims. The industry’s progression on Wall Street – ETFs, DATs, investments and more – means crypto could inevitably rise or fall as Trump’s hot and cold trade war with China continues. Friday’s events could happen again, but perhaps not with the same magnitude or intensity.
The coming days will reveal the extent of the damage, the companies affected, and the extent to which publicly traded crypto companies will be affected.
More broadly, it remains to be seen whether Friday was the start of a new cryptocurrency bear market – or the latest bounce from its most significant bull market yet.
