Crypto Carnage: $1.75 Billion Evaporates in Market Meltdown - What Triggered the Crash?

Digital asset markets just got a brutal reality check. A massive liquidation wave swept through the ecosystem, wiping out a staggering $1.75 billion in leveraged positions. Panic selling ensued, turning green portfolios red in a matter of hours.

The Liquidation Cascade

It started with a sharp, unexpected drop in Bitcoin's price. That initial move triggered a domino effect across perpetual futures markets. Over-leveraged long positions—betting on endless upside—got liquidated first. Their forced selling pushed prices lower, which then hit the next tier of leverage. The cascade fed on itself, a classic deleveraging event that exposed just how fragile over-optimistic positioning can be.

Beyond the Obvious Trigger

While the price drop lit the fuse, the powder keg was already built. Market sentiment had grown excessively bullish, with funding rates turning positive across major exchanges. This created a crowded trade. When everyone's leaning the same way on a seesaw, it doesn't take much weight to flip it. Add in some concerning macro data whispers and a few large, nervous whales moving funds to cold storage, and the stage was set for a correction.

The Aftermath and the Road Ahead

The dust is settling, but the charts are a mess. Key support levels shattered like glass. The volatility is a stark reminder that crypto markets don't move in a straight line—even during a bull run. This flush likely cleared out weak hands and excessive leverage, which isn't entirely a bad thing for long-term health. It resets the playing field. Just another day where the market efficiently separates speculative gambling from genuine conviction—and takes a hefty fee from both, naturally.

Why Did The Cryptocurrency Market Crash?

The cryptocurrency market has struggled over the last few months. bitcoin (BTC) reached an all-time high of $126,080 on Oct. 6, 2025, but the feat was followed by a market-wide correction later that month. The crypto market has been on a downtrend since October. The 2025 crash was triggered by macroeconomic uncertainties and investors’ pricing in the lack of interest rate cuts.

The latest cryptocurrency market crash could be due to multiple factors, including the fact that the US government is close to another shutdown. Firstly, sell pressure has been high, arising from macroeconomic uncertainties. Global geopolitical tensions have further put a strain on the crypto market. The developments have led to investors parking their funds in SAFE havens, such as gold and silver, both of which have hit new all-time highs.

Moreover, President TRUMP is suing the IRS and the US Treasury for $10 billion. The potential government shutdown and the IRS-US Treasury suit could be the light that ignited the fuse. The development may have led to a massive dip in investor confidence, leading to a massive exodus from risky markets, such as cryptocurrencies.

JUST IN: President Trump sues IRS and US Treasury for $10 billion over tax return leaks.

Furthermore, the market crash comes right ahead of potential pro-crypto legislation in the US. Coinbase CEO Brian Armstrong voiced concerns about the bill, saying that the current bill is worse than no bill. Investors may be becoming weary about the upcoming cryptocurrency regulatory bill, choosing to exit positions before it is passed.

JUST IN:SEC and CFTC expected to sign agreement on crypto oversight.

The cryptocurrency market may be entering another long winter. We could see prices fall below the $70,000 mark over the coming days.