Cryptocurrency Liquidation Crisis Triggers Chain Liquidation: Nearly $1 Billion Disappears in a Day

Cryptocurrency liquidation storm strikes the market again. According to on-chain data platform CoinGlass, the total contract liquidation volume across the network in the past 24 hours approached $1 billion, forcing over 220,000 traders to close their positions. However, this is only the tip of the iceberg of publicly available statistics; the actual liquidation scale is likely far beyond the figures reported.

This wave of crypto liquidations did not come out of nowhere. Vincent Liu, Chief Investment Officer of Kronos Research, pointed out that this $980 million liquidation storm is the result of multiple factors stacking up—political uncertainty, rising risk sentiment, and the dangerous combination of over-leverage among market participants.

How the liquidation storm was triggered: the sudden collapse of optimism

Before the storm, the cryptocurrency market was shrouded in a strong optimistic atmosphere. Bitcoin recently hit a historic high of $126.08K, then oscillated within a high-range zone. But the situation suddenly reversed.

U.S. President Trump and entrepreneur Elon Musk exchanged fire remotely over tax and spending issues related to the “Big and Beautiful Act,” sparking fierce disputes that raised market concerns. This sudden political event instantly impacted traders’ sentiment, breaking the previously one-sided bullish expectation. Buying momentum collapsed, Bitcoin plummeted, nearly breaching the $100K mark. By the time of writing, it had rebounded to around $90.36K.

According to the latest data, BTC has fallen from its all-time high of $126.08K to the current $90.36K, a decline of 28%, illustrating the intense market correction.

Chain reaction of automatic leverage liquidations

The unique feature of the crypto market is that automatic liquidation mechanisms can continue to amplify the downward trend like a snowball. Nick Ruck, head of LVRG Research, pointed out that when the price drops trigger stop-loss points for some traders, these automatic liquidations further push down the price, triggering chain liquidations of more highly leveraged positions, turning what was a sentiment-driven correction into a full-blown crash.

CoinGlass data shows that long positions suffered the most severe blow in this liquidation wave. Total liquidations in the past 24 hours reached $980.9 million, of which $876.23 million came from long positions. Specifically:

• Bitcoin traders suffered the heaviest losses: approximately $341.71 million in long positions were liquidated, with up to 90% coming from long liquidations
• Ethereum was not spared: over $260 million worth of positions were liquidated

The truth behind the reversal of bullish and bearish sentiment

Vincent Liu’s analysis reveals the deeper reasons behind this wave of crypto liquidations. Many high-leverage traders were overly optimistic during the unilateral market rise, continuously adding to their long positions. When unexpected events shattered the upward expectation, these over-leveraged positions instantly became self-destructive forces.

Market nerves are already tense, making panic easy to trigger; any slight disturbance can spark a new round of selling pressure. From this perspective, the risk structure of the crypto market itself is relatively fragile—based on leverage and automatic liquidation mechanisms, any emotional fluctuation can evolve into systemic risk.

The “perfect storm” for high-leverage traders

Vincent Liu calls this event a “perfect storm”—with rising political uncertainty, tightening market liquidity, and concentrated high-leverage positions, the threefold pressure combined to cause nearly $1 billion in instant liquidations.

After the storm, the market should shift toward more rational analysis. However, Nick Ruck warns that investors should closely monitor:

• The overall economic development between China and the US
• Progress of Trump’s “Big and Beautiful Act”
• USD trend and international capital flows
• Changes in institutional fund movements

These factors will directly influence the subsequent trend of the crypto market.

Structural risks of crypto liquidations

After experiencing a wave of liquidations, the market has not truly stabilized. Over-leveraged traders remain potential triggers; any new negative catalyst could reignite volatility.

Vincent Liu emphasizes that the structure of the crypto market is inherently fragile, and participants need to recognize this. Leverage trading amplifies gains but also multiplies risks. In the crypto liquidation storm, the ultimate victims are often those traders with the poorest risk management.

Looking ahead, BTC needs to find a new equilibrium between $90K and $126K. Market participants should take this liquidation wave as a warning, re-evaluate their risk exposure, and guard against the next crypto liquidation crisis.