BTC, ETH, XRP and SOL Enter Slow Bottoming Process After $16B Liquidations

A massive $16 billion liquidation event swept through major cryptocurrency markets overnight, unwinding leveraged long positions on Bitcoin, Ether, XRP and Solana. The forced sell-off sent prices tumbling across spot and derivatives venues, with cascading margin calls exacerbating the initial downturn.

Data from CoinGlass indicates that institutional and retail participants were caught off guard by the sudden drop, resulting in a sharp contraction of open interest and rapid deleveraging across major exchanges. Market makers, historically responsible for stabilizing liquidity, scaled back quoting activity amid heightened risk, further constraining trading depth.

As spot ETFs are closed over weekends and derivatives desks limit overnight operations, liquidity conditions are expected to remain thin. This environment sets the stage for an extended bottoming phase, where gradual accumulation by larger participants may proceed unevenly and within narrower price bands.

Risk-off sentiment stemming from U.S.-China trade tensions continues to loom over markets, adding an external layer of uncertainty to recovery prospects. Analysts note that until macro catalysts stabilize, market makers and arbitrage desks will likely adopt defensive stances, waiting for clear directional signals before increasing exposure.

Investors are advised to monitor funding rates, open interest trends and bid-ask spreads as indicators of underlying market health. A sustained re-entry of institutional liquidity could mark the transition from liquidation-driven volatility to selective buying, but such a shift may unfold over several days given prevailing market conditions.