Crypto Markets See $1.7 Billion Wiped Out in Leveraged Wipeout as Geopolitical Fears Spike
The cryptocurrency market endured a brutal 24-hour period of deleveraging, with total liquidations soaring past $1.7 billion as escalating Middle East tensions rattled global risk assets.
The wave of forced closures, primarily affecting bullish bets, underscores the fragility of highly leveraged crypto markets during periods of macro uncertainty. Total market capitalization fell roughly 6%, dragging Bitcoin and Ethereum to two-month lows before a modest recovery.
Data from analytics platform CoinGlass reveals the scale of the damage: approximately 270,438 traders were liquidated. Long positions bore the brunt, accounting for a staggering $1.57 billion of the total. Bitcoin alone saw $768.69 million in liquidations, with Ethereum following at $417.43 million.
"This was a classic margin call cascade," explained Michael Chen, a derivatives analyst at ArcaTech Advisors. "The initial dip, fueled by flight-to-safety moves, triggered automatic liquidations on over-leveraged long positions. That selling then pressured prices further, creating a feedback loop."
The selling was not isolated to crypto. Traditional safe-havens like gold also faced pressure, suggesting a broad-based move to cash amid heightened volatility. On-chain activity pointed to distress, with analytics firm Lookonchain reporting notable sell-offs by so-called 'whale' wallets.
Market sentiment cratered in tandem. The widely watched Crypto Fear & Greed Index plummeted to 16—a level denoting "Extreme Fear"—marking its lowest point this year.
Exchange-specific data highlighted where the pain was most acute. Hyperliquid recorded the highest liquidation volumes, followed by Bybit and Binance.
Analyst Perspectives & Market Reaction
The event sparked intense debate among market observers:
Sarah Jennings, Portfolio Manager at Vertex Digital Funds: "While painful, this is a necessary cleansing of excessive leverage. It restores healthier foundations for the next leg up, provided macro headwinds subside. The underlying blockchain activity remains robust."
Marcus Thorne, independent trader and commentator: "It's utter insanity. The same promoters who tout crypto as 'uncorrelated' and a 'hedge' watch it get shredded every time there's a global hiccup. This market is built on a house of cards—leveraged retail traders funding whale exits. When will people learn?"
Dr. Aris Kalogerou, Economics Professor at Carlton University: "The correlation with traditional risk-off events is becoming harder to ignore. This volatility underscores that cryptocurrencies are still predominantly perceived as risk assets, not digital gold, by institutional capital. Regulatory clarity is needed to change that narrative."
As markets enter February, the key question is whether this represents a capitulation bottom or the start of a deeper corrective phase. Much may depend on the trajectory of the geopolitical tensions that sparked the initial flight to safety.
— Reporting by Kamina Bashir, with additional analysis from BeInCrypto Markets. Edited for clarity and context.