The sudden drop of Bitcoin below $90,000 sparked $1.09 billion in forced liquidations in less than 24 hours, affecting 183,000 traders and revealing an excessive use of leverage.
Nearly 92% of the liquidations were long positions, showing a market heavily positioned for a rise and caught off guard by the swift movement.
The downturn is part of a global macro shock, combining US-European trade tensions and Japanese bond stress, strengthening risk aversion.
Market Heavily Positioned for a Rise
The breakdown of the liquidations is clear: nearly 92% of the eliminated amounts come from long positions. In other words, the vast majority of traders anticipated an immediate continuation of the rise with a massive use of leverage.
The largest individual liquidation reached $13.52 million on a BTCUSDT contract, a sign that even significant players were caught off guard by the brutality of the movement. When the price accelerated downward, margin calls triggered a cascade of forced sales.
This mechanism is well-known in crypto markets. As soon as margin levels are not met, platforms automatically close positions, intensifying selling pressure and increasing volatility.
A Swift Drop in a Degraded Macro Environment
Price-wise, Bitcoin dropped up to 3%, hitting a low around $87,800 in the evening before slightly recovering above $89,000 this morning. This decline ends the consolidation phase observed last week when the market seemed firmly positioned near its highs.
But the movement is not solely explained by internal factors in the crypto market. It is part of a broader reversal of global sentiment towards risky assets.
New threats of tariffs by Donald Trump against European countries have revived fears of lasting trade tensions. Meanwhile, a sharp correction in the Japanese sovereign bond market pushed global yields higher, tightening financial conditions.
Cryptos, the Weakest Link in a Brutal Macro Shock
This wave of liquidations is not a result of prolonged euphoria but of an already fragile market. Bitcoin had been trading in a narrow range for several weeks, without a clear directional trend, with compressed volatility and increasingly thin liquidity on derivatives.
In this context, the crypto market primarily reacted as a mechanical amplifier of the macro shock. The resurgence of trade tensions between the US and Europe, combined with stress in the Japanese bond market and rising global yields, triggered a rapid reduction in risk exposure across all financial assets.
The message sent by the market is primarily a signal of caution. As long as macro uncertainties remain high and bond volatility continues to affect risky assets, cryptos will remain exposed to rapid and disorderly movements, regardless of any long-term bullish or bearish narrative.
