In the world of cryptocurrency, the past weekend was full of turbulence. Following the announcement of new US tariffs on Mexico, Canada, and China, the crypto market suffered a significant correction, leading to its most substantial retrace since the last few months. The accelerated sell-offs led to a massive leverage liquidation that, as per the latest insights, was remarkably higher than initially estimated.
Weekend Downfall of 21% in the Crypto Market
At February’s start, US President Donald Trump unveiled new tariffs targeting Mexico, Canada, and China. These new tariffs include an additional 25% on imports from its neighboring countries and 10% on imports from the Asian superpower. The announcement triggered unprecedented panic in the crypto sphere, and the market started to plunge from its earlier highs of the week.
Bitcoin (BTC), the recognized leader in the crypto realm, experienced a 12.5% drop over the weekend, reaching a low of $91,000. Ethereum (ETH), the next in line by market capitalization, saw over a 35% retreat in its price, hitting $2,100, a record low since last fall.
With the escalating fear of a potential worldwide tariff war, altcoins joined in the market downfall, nearing their lowest monthly values. Consequently, the total crypto market capitalization saw a 21% drop, the most significant correction since the ‘Red Monday’ incident of August 2024.
A report from Nansen proposed that the crypto market might currently be more susceptible to negative sentiment than positive news. This premise is supported by the most recent correction induced by DeepSeek’s negative intel.
Liquidations Exceed Initial Estimates
Following the market crash, there was an onset of widespread leverage liquidations. Initial evaluations projected these liquidations to be over $2 billion. Data collected from CoinGlass reaffirmed these numbers, indicating that “In the past 24 hours, 743,002 traders were liquidated, the total liquidations come in at $2.30 billion,” with Ethereum’s $637 million liquidations taking the lead.
However, these estimates may not reflect the complete picture. Ben Zhou, Bybit’s co-founder and CEO, revealed that the true figures might be far higher than $2 billion. He attributed the discrepancy to the limitations of the application programming interfaces (API) in recording all the liquidations.
Zhou’s calculations pegged Bybit’s 24-hour liquidation at around $2.1 billion, marking a stupendous 530% increase from the $333 million recorded by CoinGlass. Given these limitations, it’s plausible that other exchanges are also facing similar issues, which could potentially push the total liquidation value to a staggering $8 billion to $10 billion.
Moving forward, Zhou has pledged increased transparency in the disclosure of liquidation data from Bybit. This commitment aims to provide an accurate representation of the market scenario and assist traders in making informed decisions.
FAQs
What triggered the recent market crash in the crypto world?
The announcement of new US tariffs on Mexico, Canada, and China led to widespread panic in the crypto market, resulting in a significant market crash.
What was the impact of the crypto market crash on Bitcoin and Ethereum?
Bitcoin experienced a 12.5% drop, reaching a record low of $91,000. Ethereum, on the other hand, saw over a 35% plunge in its price, hitting $2,100.
What were the initial estimates of leverage liquidations following the market crash?
Initial estimates projected the leverage liquidations to be over $2 billion. However, Bybit’s CEO suggested that the actual figures could be far higher due to limitation in application programming interfaces (API).
What measures are being taken to ensure more transparency in liquidation data?
Bybit’s CEO has pledged increased transparency in the disclosure of liquidation data in light of the recent market crash.
