There may be no crying in the casino. But on days like these, you’d be forgiven for shedding a tear. With $9.4 billion liquidated in a single day in the crypto market, the flash crash comes just in time to punch the late-coming retail crowd in the face.
In a single 24-hour span, crypto traders witnessed one of the biggest liquidation cascades since the heydays of 2021; a moment that rechristened “risk” for an entire generation.
The crypto market gets nuked
Of the $9.4 billion in liquidations over the last 24 hours, more than $6 billion in leveraged positions were wiped out in less than one hour. As Stock Market News commented:
“We just witnessed history.”
Bitcoin plummeted as much as 12% and, in typical fashion, altcoins fared even worse.
Why the sudden wipeout? One word: tariffs. The cascading selloff coincided with President Donald Trump’s announcement of aggressively expanded tariffs on China. His rhetoric, whether or not it comes to pass, roiled markets globally and snowballed into a broad risk-off episode.
For an industry long accustomed to outsized moves, it was a powerful reminder that crypto is still at the mercy of macro, and when the world’s two largest economies volley threats, digital assets don’t simply wobble, they implode.
PTSD: altcoin traders relive 2021
If parts of this seem familiar, they should. The magnitude and velocity of the selloff evoked 2021’s grand altcoin reckoning, when exchange overloads, cascading stop-losses, and unbalanced leverage left traders scrambling for cover.
Those seeking a safe haven were left sorely disappointed: many exchanges struggled under the deluge, with reports of brief outages and slippage on even the most liquid pairs. The brutal crypto market crash led Wolf of All Streets’ Scott Melker to comment:
“Seems somewhat guaranteed that a major market maker blew up today. Wouldn’t be surprised if an exchange quietly went insolvent today as well. This was a 2021 type situation for altcoins.”
Gold soars, Bitcoin sinks
As crypto stumbled, gold grabbed the spotlight. On the same day, gold, a classic safe haven, surged to all-time highs, leaving some investors scratching their heads. After all, didn’t JPMorgan just bundle Bitcoin and gold together in the ‘debasement trade’? Didn’t mainstream media declare Bitcoin’s haven status?
Yet here we are: gold rallies while Bitcoin dumps, drawing a bright line under just how far crypto still has to go in earning “safe haven” status.
Not everyone fared badly during the crash. One opportunistic trader opened a huge short position just 30 minutes before Trump’s tariff announcement and closed it with an $88 million profit: all from an account opened that very same day. That’s a ratio of timing the market versus time in the market to go down in history books.
Putting it in perspective
Perspective matters. This liquidation dollar amount is eye-watering, but so too is the scale of today’s crypto market. This may be the biggest ever liquidation the crypto market has seen, but to borrow logic from the wise man, Homer Simpson, for a moment: it’s the biggest ever liquidation the crypto market has seen – so far. Bigger will surely come.
It’s essential to keep the figure in context, as a percentage of the total market cap. The industry has ballooned since 2021, so while the shock feels biblical, in proportional terms, it may not be as catastrophic as the numbers initially suggest.
Use the events of the past 24 hours as a learning moment. Volatility, leverage, and geopolitics remain a potent and potentially explosive cocktail for digital assets. Stay humble stack sats, and maybe resist the urge to get Grandma trading perps.
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