- Over $19B in crypto liquidations are the largest single day event, surpassing both the FTX and Covid crashes.
- Bitcoin fell below $110K, while Ethereum dropped 12.5%, indicating panic driven by Trump’s tariff announcement.
- Derivatives stress and negative funding rates deepened the selloff, as sentiment collapsed to “Fear” territory.
The crypto market had a sharp 9.6% decline over the past 24 hours as geopolitical tensions, mass liquidations and equity market volatility led to a sell-off across digital assets. Bitcoin briefly dropped below $110,000, while Ethereum fell by 12.5%, one of the steepest single day declines of the year. The downturn came after the U.S. President Donald Trump threatened to impose 100% tariffs on Chinese imports, leading to a global risk off sentiment.
Geopolitical Outlook and Market Correlation
The announcement from Trump led to an immediate flight from risk assets. Bitcoin’s 0.92 correlation with the S&P 500 left it exposed as U.S. equities tumbled. The Nasdaq lost 2%, while investors shifted capital toward safe-haven assets such as gold, which rose 2%.
Analysts say the connected markets made the reaction stronger. Delays in U.S. economic data, due to a possible government shutdown, added more worry. Crypto traders quickly closed risky positions to avoid bigger losses. Notably, the combination of equity weakness and declining investor confidence created a liquidity vacuum across major trading pairs.
Derivatives Wipeout Deepens the Downturn
Data from Coinglass showed that more than 1.6 million traders were liquidated within a single day, totaling $19.13 billion, the largest event in crypto history. The actual number could be higher since Binance records only one liquidation order per second.
Perpetual funding rates turned deeply negative at -0.0577%, reflecting extreme panic. Arthur Hayes, co-founder of BitMEX, stated that major exchanges auto liquidated collateral from cross margined positions, which intensified pressure on altcoins.
Open interest rose by 2.4% to $1.16 trillion before the collapse, indicating excessive leverage. Ethena’s USDe stablecoin also briefly lost its peg, highlighting stress within derivatives markets.
Sentiment Collapse Accelerates
Market sentiment deteriorated sharply as the Crypto Fear & Greed Index fell from 54 to 35 in just 24 hours. According to social analytics firm As Crypto, retail sentiment scored 5.27 out of 10, with bearish commentary dominating online discussions. Bitcoin’s breakdown below its 50-day moving average at $113,000 fueled additional selling.
The altcoin season index fell 40% over the week, showing a shift away from high-risk assets. Analysts noted that today’s $19 billion liquidation dwarfed previous historic crashes, including the FTX collapse and the March 2020 Covid crash, underscoring the scale of the event.
