Experts view $20 billion liquidation wave as a short-term technical correction, not a shift in market fundamentals
The recent crypto market meltdown — which erased more than $20 billion in liquidations within 24 hours — is being described by analysts as a temporary disruption rather than the start of a prolonged downturn.
According to market strategists, the crash was driven by a “perfect storm” of short-term factors, including excessive leverage, thin liquidity, and U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports. The event triggered panic selling, wiping out nearly 1.6 million traders and causing several major tokens to plunge by more than 90% in hours.
“This was a leverage-driven liquidation event, not a structural breakdown,” said Kobessi. “The combination of Trump’s late-day announcement and extreme market exposure created the conditions for a cascading sell-off.”
Even more evidence of the excessive long leverage in the market:
ALL major exchanges except for Bitfinex saw an overwhelming percentage of long liquidations.
Most were 90%+ long including a massive $10.3 BILLION on Hyperliquid alone.
Data shows the market was heavily skewed toward long positions before the crash — with $16.7 billion in longs liquidated versus $2.5 billion in shorts, a nearly 7:1 ratio. The imbalance amplified volatility as traders rushed to close positions amid surging liquidation pressure.
The sharp move came late Friday evening, a time when market liquidity is typically at its weakest, allowing relatively small orders to trigger large price swings. Analysts emphasized that this timing magnified the scale of the crash.
“We believe this correction does not carry long-term fundamental implications,” said another investment researcher. “Crypto remains strong, and we expect stabilization as leveraged traders are cleared out of the system.”
Bitcoin briefly dropped below $110,000, while the broader altcoin market — excluding Bitcoin and Ethereum — saw total capitalization fall from $1.15 trillion to $766 billion.
Experts argue that such rapid liquidations often precede recovery phases. “These wipeouts remove speculative excess, setting the stage for renewed growth,” one market observer noted.
While short-term volatility is expected to persist, analysts maintain that crypto’s underlying fundamentals remain intact, and the long-term trajectory for digital assets continues to lean bullish.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.
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