The cryptocurrency market faced a brutal start to the week, with over $770 million in bullish liquidations in just 24 hours, marking one of the largest liquidation events in January. The carnage began early Monday as Bitcoin (BTC) dipped below $100,000, dragging down major altcoins and triggering widespread losses across the market.
Solana and Dogecoin Bear the Brunt
Solana (SOL) and Dogecoin (DOGE) emerged as the biggest losers among major cryptocurrencies, each plunging over 10%. Ethereum (ETH), Binance Coin (BNB), XRP (Ripple), and Cardano (ADA) weren’t spared either, registering losses of up to 9%. This sell-off also hit smaller tokens, with notable declines in Pepe (PEPE), Aptos (APT), and Virtuals (VIRTUALS), some dropping as much as 18%.
The overall cryptocurrency market capitalization plummeted by 8.5% as traders grappled with significant liquidations, signaling a wave of bearish sentiment across the board.
The Numbers Behind the Liquidations
Futures traders were hit hard, with BTC-tracked products accounting for $238 million in liquidations. Solana and Dogecoin futures saw a combined $50 million in losses, while altcoin futures collectively lost $138 million. Ethereum-focused futures contributed $84 million to the liquidation tally.
The largest single liquidation order, valued at $98.4 million, occurred on the HTX exchange through a tether-margined BTC trade, highlighting the high stakes in leveraged crypto trading.
Liquidations occur when traders lack sufficient funds to maintain their leveraged positions, a common occurrence in the volatile cryptocurrency market. However, massive liquidation events like Monday’s often signal broader market corrections and can provide actionable insights for traders.
What’s Driving the Sell-Off?
The market downturn coincided with traders taking profits ahead of the U.S. Federal Open Market Committee (FOMC) meeting, the first of the year. Uncertainty in global markets further compounded the sell-off, with U.S. stock futures also tumbling.
Additionally, external factors such as emerging competition from China-based DeepSeek, which threatens the AI narrative spearheaded by OpenAI, contributed to bearish sentiment.
Market Outlook: A Turning Point or a Warning?
Heavy liquidation events like this can be double-edged swords. On one hand, they may indicate an overstretched market correction, offering potential support or resistance levels for price recovery. On the other hand, if bearish momentum continues, short sellers may double down on their positions, potentially driving prices even lower.
Contrarian traders, however, could view this as a buying opportunity, anticipating a rebound once selling pressure diminishes. Jupiter’s JUP token, which gained 3.5% during the market bloodbath due to a buyback announcement, serves as a rare bright spot, showing that market-specific catalysts can still drive gains even in bearish conditions.
As the market braces for the FOMC meeting and traders assess their positions, one thing is clear: volatility remains the cryptocurrency market’s defining characteristic. For now, all eyes are on whether the sell-off is a temporary correction or the start of a deeper downturn.
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