$1.8B Crypto Liquidation Tsunami: Market Bottom or Just the Beginning?

Bloodbath on Blockchain Street as leveraged positions vaporize in historic cascade

The Great Unwind

Digital asset markets just endured their most brutal liquidation event since the 2022 collapse—$1.8 billion in positions forcibly closed within 24 hours. Margin calls hit like dominoes across exchanges from Binance to Coinbase, wiping out over-leveraged traders who bet wrong on the recent volatility.

Whale Watching Turns Bloody

Major players got caught flat-footed too. Single positions exceeding $10 million evaporated as stop-losses triggered chain reactions. The liquidation storm hit Bitcoin hardest at $760 million, but altcoins didn't escape the carnage—Ethereum saw $460 million wiped while memecoins bled out spectacularly.

Cleansing Fire or Systemic Rot?

Some veterans call this the 'final flush' needed to reset overextended markets. Others see deeper structural issues—exchanges offering 100x leverage creating ticking time bombs. One hedge fund manager quipped 'Traders treating crypto like a casino shouldn't be surprised when the house wins.'

The real question remains: does this purge create fertile ground for the next bull run, or simply reveal how fragile crypto's foundations still are? With regulators circling like sharks smelling blood, the industry's resilience faces its ultimate test.

Long ETH and BTC positions saw the lion’s share of liquidations. Source: CoinGlass

Crypto traders overleveraged: Same story, nothing new

Real Vision founder Raoul Pal said the same thing happens all the time, adding “the crypto market is focused on a big breakout, gets levered long ahead of it, it fails at first attempt, so everyone gets liquidated... only then does the actual breakout occur, leaving everyone sidelined.”

CoinGlass reported that it was the largest long liquidation event of the year. There have been similar liquidation events in late February, early April, and early August, when spot markets shed hundreds of billions over a very short period.

Largest long position wipeout of 2025. Source: CoinGlass

Others blame altcoin leverage

Researcher “Bull Theory” blamed the big flush on an “excessive imbalance” of altcoin leverage compared to Bitcoin. The liquidations for Ether topped $500 million, more than double those for long Bitcoin positions. 

When altcoin leverage gets this extreme, the market doesn’t ignore it. One sharp MOVE down triggers cascading liquidations. That’s how you flush out weak hands and reset the board.

Nassar Achkar, chief strategy officer at the CoinW exchange, said that the flushout “may present a near-term adjustment rather than a shift in the long-term structural bull run, as the path of future easing remains supportive for risk-on assets like Bitcoin.”

Potential dip back to support zone

Meanwhile, IG market analyst Tony Sycamore told Cointelegraph that Bitcoin hasn’t been correlated with tech stocks or gold recently, but this could be “largely due to technical factors and it needs more time to correct its stellar gains to the August $125k high over the past 12 months and to continue to work off overbought readings.”

Technically, a dip back into the $105/100k support zone, which includes the 200-day moving average at $103,700, makes sense. It WOULD flush out a few of the weaker hands and Johnny come lately types - and I think set up a nice buying opportunity for a run up into year-end.

Bitcoin had only corrected by around 13% in early September since its peak in mid-August. The current drop from the all-time high stands at 9.5% despite this week’s rout, which is shallow compared to previous bull market year pullbacks. 

BTC fell in 8 of the past 13 months of September but still remains up around 4% so far this month. It has historically performed much better in “Uptober.”