In a dramatic turn of events, the cryptocurrency market witnessed $941 million in liquidations within 24 hours, marking one of the largest single-day wipeouts of leveraged positions in 2025. The liquidation wave came as Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) retreated from near-record highs, triggered by a combination of macroeconomic shocks and overleveraged speculation.
This event underscores the risks of excessive leverage in crypto trading and highlights the fragile balance between institutional inflows and speculative exuberance.
Macro Backdrop: Why the Market Cracked
The catalyst for this liquidation cascade was a surprise 0.9% spike in the U.S. Producer Price Index (PPI), the sharpest monthly rise in more than three years. Inflation fears rattled both equities and crypto markets, forcing risk-off positioning.
For crypto traders, this meant sudden unwinds of long positions as expectations of looser monetary policy weakened. Institutional investors reduced ETF inflows, while leveraged traders bore the brunt of cascading liquidations.
Anatomy of the $941M Liquidation
According to on-chain and derivatives exchange data:
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Long positions accounted for nearly $803M of the wipeout.
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Shorts contributed around $138M, suggesting that even bearish traders were not fully immune.
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Ethereum alone represented 32% of liquidations, a reflection of traders piling into ETH as it approached its December 2021 all-time high of $4,600.
This liquidation wave wasn’t just about price declines; it was the mechanical force of leverage, where traders using 20x, 50x, or even 100x positions were instantly closed out as small moves translated into massive losses.
Bitcoin: From Euphoria to Reality Check
Bitcoin, which recently touched an all-time high near $124,000, retreated toward $119,000 during the liquidation storm. While the drop may seem modest (around 2.2%), the consequences were amplified across leveraged markets.
Liquidation heatmaps showed concentrated clusters around $122K–$124K levels, where late buyers had entered long trades. Once these levels broke, liquidation engines across exchanges rapidly triggered, deepening the sell-off.
Ethereum: Resistance at Historic Levels
Ethereum’s retracement was sharper, with a 2.4% drop, erasing momentum as it attempted to reclaim its previous cycle high. Analysts note that ETH’s high liquidation density around the $4,500–$4,600 resistance zone magnified the correction.
Max Shannon of Bitwise remarked that ETH liquidations alone accounted for nearly one-third of the global total, as traders attempted to front-run a possible breakout into price discovery. Instead, they were flushed out in what analysts call a “classic long squeeze.”
Dogecoin and Altcoins: Collateral Damage
While Bitcoin and Ethereum led the liquidation wave, altcoins saw steeper declines.
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Dogecoin (DOGE): Fell 3.7%, with high leverage unwinds on perpetual swaps.
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Solana (SOL): Dropped nearly 4.5%, erasing recent gains.
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Cardano (ADA): Declined around 4.6%.
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XRP: Retreated by 3%.
These declines highlight the outsized impact of Bitcoin-led market moves on lower-liquidity tokens. When BTC and ETH stumble, altcoins often fall even harder due to their reliance on speculative capital.
Technical Dynamics: How Cascading Liquidations Work
Dmitry Lapidus of CoinFund explained that liquidations occur when the margin balance of a trader’s account falls below required maintenance levels. With leverage as high as 100x available on perpetual contracts, even a 2% move against the position can erase the entire margin, forcing automatic liquidation.
As positions unwind, this creates self-reinforcing selling pressure, pushing prices further down, triggering more liquidations—a feedback loop known as a liquidation cascade.
Comparisons to Past Liquidation Events
This isn’t the first time the crypto market has seen massive wipeouts:
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May 2021: $8.6B in liquidations during the China mining ban crash.
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December 2021: $2.5B liquidated as Bitcoin corrected from $69K.
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June 2022: $1B+ liquidations amid Terra collapse contagion.
While the $941M event is smaller in scale, it is significant because it occurred near all-time highs, not at cycle lows. This suggests markets were overextended in optimism, amplifying vulnerability.
Investor Sentiment and ETF Impact
At the time of the liquidation, Bitcoin ETFs recorded net outflows for the first time in weeks. Institutional players trimmed risk exposure, signaling that even professional investors were wary of extended valuations.
Yet, analysts caution against panic. Unlike previous liquidation crises, fundamentals remain strong: Bitcoin adoption, Ethereum staking, and institutional inflows continue to show long-term resilience.
Risk Management Lessons
For traders and investors, this event is a stark reminder of:
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The dangers of high leverage: Small moves can liquidate entire portfolios.
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Macro correlations: Crypto is increasingly tied to inflation, interest rates, and ETF flows.
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Psychological resistance: All-time highs act as magnet levels for both bulls and bears, amplifying volatility.
Experienced traders emphasize the importance of lower leverage, wider stops, and diversification to survive such episodes.
Final Thoughts
The $941M liquidation wave as BTC, ETH, and DOGE retreated from highs demonstrates how leverage remains a double-edged sword in crypto markets. While the pullback shook out overleveraged traders, the long-term structure of the market remains intact.
With Bitcoin still near historic highs and Ethereum on the cusp of new resistance tests, volatility is here to stay. For investors, the lesson is clear: leverage fuels opportunity, but it also magnifies risk.
