Bitcoin long liquidations hit $500 million on Monday as the weekend’s rally was erased and major Altcoins plummeted. The sell off was triggered by a surprise de-escalation in US-China trade tensions which shifted sentiment and forced liquidations across crypto derivatives markets.
CoinGlass data showed over $530 million in long positions were liquidated in 24 hours, with $200 million of that from Bitcoin futures alone. Ether futures followed with $170 million in liquidations, showing how over-leveraged bets on continued upside were punished.
The drop ended the euphoria from last week which saw Bitcoin hit intraday highs above $104,000 in the biggest short squeeze since 2021. Altcoins followed suit with Ethereum up 40% in days and tokens like Solana and Dogecoin up in digits. But those gains were wiped out in Monday’s US session as sentiment turned.
US-China Trade Truce Pops Crypto’s Risk-On Bubble
The catalyst for this reversal was a US-China trade truce. Reports confirmed both countries agreed to remove certain tariffs and expressed renewed commitment to trade cooperation. While equities markets reacted positively, crypto markets reacted negatively.
The reduction in geopolitical uncertainty killed the high risk appetite that had been supporting crypto assets. Traders saw the trade truce as a sign that aggressive monetary easing which many had hoped would boost crypto further may not be as necessary.
According to Jeff Mei, Chief Operating Officer at BTSE, this macro pivot could have deeper implications.
“Right now macro concerns are driving the market and the next Fed decision and outlook remarks in June will likely be the key factor in driving Bitcoin past its previous all-time high,” Mei told CoinDesk via Telegram. “This would stimulate lending and investment in the US economy and hopefully drive growth, avoiding the recession investors are worried about.”
Altcoin Crash: DOGE, ADA, XRP Lead Losses
The sentiment shift hit altcoins hard. Dogecoin (DOGE) and Cardano (ADA) both fell 7%, Solana (SOL), XRP and BNB fell 5-6%. The long liquidation wave came after futures open interest dropped by over $1.2 billion across major exchanges.
This is a big deleveraging, many longs were forced to close due to margin call, a mechanism to protect exchanges from extreme volatility in leveraged markets. Coinglass said many positions were wiped out due to insufficient margin.
Reset or Start of a New Downtrend?
The scale of the long liquidation is big but analysts say it could be a sentiment reset. Last week’s rally had funding rates and leverage at extreme levels so markets were due for a correction.
Technical analysts are looking at the $95,000–$98,000 range as support for Bitcoin. If that holds, it could be a consolidation zone before the June Fed meeting. But if it breaks lower, it could be a bigger unwind of positions.
Open interest is below last week’s highs so risk appetite has cooled. Market watchers are now looking at macro data, US inflation and Fed comments to see if the bounce is sustainable.
Conclusion
The sudden wave of Bitcoin long liquidations has once again shown how macro events outside of crypto can impact digital assets. As traders reposition ahead of the June Fed meeting, volatility will remain high. With altcoins getting smashed and sentiment on edge, eyes are on if Bitcoin can get back momentum or if more downside is ahead.
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FAQs
What caused the Bitcoin long liquidations?
The long liquidations were triggered by the sudden drop in Bitcoin’s price after the US and China reached a temporary truce in their trade war which killed risk-on sentiment in crypto.
How much was liquidated?
More than $530 million worth ‘of long positions were liquidated in 24 hours, including $200 million from Bitcoin futures and $170 million from Ethereum derivatives.
Why did altcoins like Dogecoin and Cardano fall?
Altcoins fell as part of a broader market ‘correction. Over-leveraged positions in DOGE and ADA were wiped out after Bitcoin’s price drop so both tokens lost around 7%.
What’s the next big event for crypto?
The next Fed meeting in June’ is the big one as it will set the tone for interest rates and economic growth which impacts crypto investment flows.
Are we in a bear market now?
Not necessarily. While it was a big correction some analysts say it’s a sentiment reset rather than the start of a new downtrend.
Glossary
Bitcoin long liquidations: When ‘a leveraged long position is forced to close when Bitcoin’s price drops and the trader’s margin goes below the required levels.
Open interest: The total number of outstanding derivative contracts (futures or options) ‘that haven’t been settled.
Short squeeze: A price increase that forces short sellers to buy back the asset, further fueling the rally.
Risk-on sentiment: When investors are more’ risk hungry due to a positive economic or policy outlook.
Futures contracts: Agreements to buy or sell an asset at a future date for a fixed ‘price.
Sources
Disclaimer: This is for informational purposes’ only and not financial advice. Cryptocurrency investments are volatile and risky. Always do your own research or consult with a licensed ‘financial advisor before making investment decisions.
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