Cryptocurrency Markets Begin to Recover From Historic Liquidation
Cryptocurrency markets are starting to recover from significant losses following an unprecedented selloff that marked the largest liquidation event to date.
On Friday, Bitcoin plummeted from $121,000 to $109,000 within just seven hours, erasing all early gains. Similarly, Ethereum dropped to a low of $3,686, while Solana fell just above $173, as reported by CoinGecko.
The chaotic trading session led to what some are calling a “flash crash of liquidations,” resulting in nearly $7 billion lost across all markets in under an hour. Of this, about $5.5 billion came from long positions, according to Sean Dawson, head of research at an on-chain options platform.
Data from CoinGlass indicated that by the end of Friday, about $20 billion in liquidations across all digital assets vanished in just a single day, with long positions accounting for the majority at $16.7 billion.
Dawson remarked that this situation represented “the largest single-day extinction in crypto history.”
Traditional stock markets also faced intense pressure, with the Nasdaq down 3.6%, the S&P 500 falling 2.7%, and the Dow slipping 1.9%.
The downturn in both stock and cryptocurrency markets followed President Trump’s announcement to cancel a meeting with Chinese President Xi Jinping and impose a “significant increase” in tariffs on imports from China, a decision Trump noted could be “potentially painful” for American consumers.
In response to this, tensions escalated as Beijing took steps to limit exports of rare earths and critical minerals, further straining relations between the two largest economies.
As the week ended, analysts suggested the crash might have stemmed from an exaggerated geopolitical reaction.
Dean Cerrone, CEO of a crypto investment management firm, described the situation as a “textbook relief rally.” He pointed out that Ethereum’s 11% resurgence is primarily due to short covering, arising from the market’s overreaction to Trump’s tariff threats.
Cerrone mentioned that selling pressure is “thin” as volatility from overleveraged traders rises and open interest in derivatives markets adjusts.
On the brighter side, Bitcoin gained 5% for the day, reaching $115,100, while Ethereum climbed 10.5% to $4,138. Other notable altcoins like Solana, BNB, and Dogecoin saw rises of 12%, 16.5%, and 11.4%, respectively.
“This defeat was a geopolitical surprise, not a structural collapse,” Cerrone concluded.
