The cryptocurrency market endured its most brutal day ever on Friday when over $19 billion in leveraged positions evaporated in a frenzy of forced sales. This dwarfed prior records, hitting nine times the scale of February’s wipeout and 19 times the chaos that followed in the wake of the FTX collapse in 2022.
Sparked by President Trump’s Truth Social post announcing 100% tariffs on Chinese imports amid escalating trade tensions, the sell-off rippled through risk assets. Bitcoin (CRYPTO:BTC) plunged more than 14% from a Friday high of $122,574 to a low of $104,783, erasing $380 billion in market cap in hours. Ethereum (CRYPTO:ETH), the blockchain’s workhorse, shed over 10% to $3,514, as traders dumped everything from blue-chip tokens to speculative altcoins.
What made this event historic wasn’t just the speed — 1.6 million accounts were liquidated in 24 hours — but the leverage that fueled it. Platforms like Hyperliquid (CRYPTO:HYPE) saw 88% of losses from overextended long bets, with ratios up to 100x turning modest dips into total ruin.. The overall market bled $200 billion, a stark reminder that crypto’s highs come with hairpin turns.
Yet recovery flickered over the weekend with prices partially recovering after Trump downplayed trade tensions. BTC clawed its way back to $115,718 by Sunday, while ETH surged 2.4% to $4,254. Altcoins like Dogecoin (CRYPTO:DOGE) and Avalanche (CRYPTO:AVAX) rebounded, trimming losses to double digits as capital rotated from riskier plays into BTC, underscoring its safe-haven status amid the storm.
The Hidden Trigger That Lit the Fuse
Friday’s carnage exposed leverage’s dark side. Borrowed bets amplify gains in bull runs but cascade into mass exits when prices tick down. A 10% BTC drop on a 10x position becomes a 100% wipeout. If traders didn’t employ stop-losses, there was no mercy — positions auto-closed below collateral lines, flooding order books and dragging prices lower.
ETH felt this acutely. Its DeFi ecosystem thrives on lending protocols, where overleveraged yields lured retail players. The drop to $3,500 triggered a chain reaction in smart contracts, liquidating billions in wrapped assets. After the crash, ETH’s flow data showed outflows to BTC, as investors sought stability over yield-chasing.
Is the Post-Crash Bounce Real or a Head Fake?
Traders are cautious, buying contracts to protect against further drops. These bets, especially on Bitcoin at $95,000 and Ethereum at $3,600, signal fear of more declines. Past flash crashes, like 2022’s 70% drop, fuel these concerns. Trade tensions or economic slowdown could deepen losses.
That’s why the bounce feels fragile. Yesterday, prices trended lower again, with BTC testing $114,000 and ETH dipping toward $4,100. Altcoins also lagged, hinting at more declines on the horizon.
Still, institutional holders, including Strategy (NASDAQ:MSTR), shrugged off the dip; their BTC hoard now tops 250,000 coins, while BlackRock‘s (NYSE:BLK) iShares Bitcoin Trust (NASDAQ:IBIT) saw net buys, recording $134 million in inflows over the past two trading days and 10 straight days of net inflows, according to CoinDesk.
Will a Crypto Winter Hit?
Fear seems to rule the trading floor now. Options data signals severe caution with volatility surging 30% in short-dated contracts. Although traders aren’t fleeing; they’re fortifying their positions with aggressive downside protection. On-chain metrics show reduced open interest as sentiment indexes hover near “extreme fear” levels last seen in 2022.
This hedging rush echoes the feeling from the 2022 bear market, which crushed 80% of crypto’s value. It took BTC two years to finally bottom.
Yet we also know what followed: one of the greatest booms ever seen. Bitcoin’s limited 21 million coin supply and growing use give it resilience, while Ethereum’s strength lies in its apps and 4% staking rewards — though it often follows Bitcoin’s trends.
Both need calmer global news to recover fully. For now (or ever, for that matter), I wouldn’t be betting any money on meme coins, but strategically buying BTC and ETH gradually rather than chasing quick gains will be the safest approach.
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