Leverage Wipeout Shakes Crypto Markets as $646 Million in Positions Get Liquidated

Image taken from bankrate.com

The crypto market opened the week on the back foot after a sharp wave of forced liquidations erased nearly $646 million in leveraged trades across major exchanges early Monday. The wipeout, dominated by long positions, deepened the month’s already painful close and pushed bitcoin, ether and leading altcoins back toward their recent lows.

Fresh data from Coinglass showed that almost 90% of the liquidations came from longs, with the single largest hit being a $14.48 million ETH–USDC position on Binance. Binance, Hyperliquid and Bybit each saw more than $160 million flushed out, signalling just how aggressively traders had been positioned during the Asian session before the market abruptly turned.

Liquidations occur when an exchange force-closes a trader’s leveraged position after the margin buffer is depleted — essentially shutting it down before losses exceed what the trader can cover. When these events stack up in quick succession, they often trigger cascading sell pressure that sends prices sharply lower. Such cascades tend to mark moments where market sentiment overshoots, sometimes hinting at a potential reversal once the excess leverage is cleared.

Bitcoin slipped over 5% to around $86,000, while ether dropped more than 6% toward $2,815. Both had shown signs of stabilizing late last week, but the forceful unwinds erased any attempt at regaining momentum. Large-cap altcoins didn’t fare much better: Solana, XRP, BNB and Dogecoin all fell between 4% and 7%, with Cardano and Lido Staked Ether seeing even steeper declines. Traders pointed to thin liquidity and an uneasy macro backdrop as catalysts behind the speed of the selloff.

The market has been struggling for footing since late November’s rapid drawdown, which came as ETF outflows, macro pressure and slow weekend trading volumes unwound weeks of crowded bullish bets. Monday’s action followed a pattern traders have seen repeatedly this year: leverage builds into resistance, funding rates turn, and a wave of forced selling hits the tape within hours.

Open interest in both bitcoin and ether perpetual futures slipped again after the rout, suggesting the speculative leverage accumulated through October’s rally is still being flushed out. Traders say positioning now looks cleaner than it has in weeks, but with sentiment still shaky, intraday volatility is likely to stay elevated until deeper liquidity returns during the U.S. trading session.