Largest Crypto Liquidation Ever Sees $16B Longs Wiped Out Amid Trade Fears

Early Saturday, President Trump’s tariff announcement on social media reignited fears of an escalating U.S.-China trade war, causing a sharp risk-off move that liquidated more than $16 billion in long crypto positions. Derivatives data reveals that most of the losses occurred during Asia trading hours, with institutional and retail participants alike caught on the wrong side of rapid price swings.

Bitcoin dropped 10% below key support around $112 000, while Ether plunged 16%, briefly trading below $3 700. The stablecoin USDe saw minute peg deviations, printing at $0.9996, as arb desks struggled to maintain equilibrium amid order book imbalances.

Market makers reported liquidity shortages on several major exchanges, with funding rates spiking above 0.05% as margin calls proliferated. Automated risk controls on certain venues triggered temporary trading halts, contributing to dislocations and wider spreads.

The sheer volume of liquidations eclipsed previous historic events, including the 2020 Covid crash and the FTX collapse in 2022. Crypto total market capitalization plunged below $3.9 trillion before stabilization efforts by algorithmic liquidity providers facilitated a partial recovery.

Looking forward, participants will watch U.S. fiscal developments and trade policy updates for cues on market resilience. The potential for further government shutdowns and geopolitical escalations remains a key factor in assessing near-term crypto market dynamics.