3 Minutes
Crypto market slides as forced liquidations wipe out leveraged positions
The cryptocurrency market opened the week in deep red as a fresh wave of forced liquidations erased roughly 646 million dollars in leveraged trades across major exchanges. This surge of deleveraging intensified losses for Bitcoin, Ethereum and most large-cap altcoins, continuing a sharp decline that began at the end of last month.
Mass long liquidations lead the sell-off
Data from CoinGlass shows that about 90 percent of the liquidated volume came from long positions. The largest single liquidation was an ETH-USDC order worth 14.48 million dollars on Binance. Binance, HyperLiquid, and Bybit each recorded more than 160 million dollars in liquidations, signaling a concentrated unwind of positions that accumulated during Asian trading sessions.
What triggers a liquidation
Liquidation happens when an exchange forcibly closes a leveraged trader's position after margin requirements are breached and the initial capital is partially or fully depleted. When funding rates flip, liquidity thins and concentrated long exposure can trigger cascading liquidations that push major crypto prices lower within hours.
Price impact: Bitcoin and Ethereum lead the drop
Bitcoin fell more than 5 percent during the sell-off, sliding toward the 86,000 dollar range. Ethereum dropped over 6 percent, trading near 2,815 dollars. Both assets, which had mounted recovery attempts late last week, retreated back to the lower bounds of November trading ranges. Other large-cap tokens such as Solana, XRP, Binance Coin and Dogecoin declined between 4 and 7 percent, while Cardano and Lido Staked Ether experienced larger draws.
Macro factors and liquidity concerns
Traders point to low market liquidity and macroeconomic uncertainty as key drivers of the rapid downside. The market has struggled to stabilize following a steep correction in late November that was amplified by macro signals, outflows from Bitcoin ETFs, and thin weekend volumes. The Monday crash followed the same pattern seen in recent months: concentrated long exposure, shifts in the funding rate, and forced selling that erodes the market within a short window.
Open Interest and leverage cleaning
Open Interest in Bitcoin and Ethereum perpetual contracts dropped further, indicating that part of the leverage built during the October rally is being cleared. Traders say positions are now more transparent, but point out that until liquidity in the US trading session improves, intraday volatility will remain elevated and markets may continue to behave in a higher-risk manner.
How traders can respond
Risk managers advise lowering leverage, using tighter risk controls, and monitoring funding rates and Open Interest to avoid large forced liquidations. With continuing macro uncertainty and uneven liquidity across sessions, disciplined position sizing and hedging remain essential for anyone trading crypto derivatives.
Key exchanges involved in the liquidations include Binance, HyperLiquid and Bybit. Market participants will be watching ETF flows, funding rates and US session liquidity for clues on whether the selling pressure will abate.
Leave a Comment