Bitcoin Market Faces Severe Liquidation Wave as 170,000 Traders Lose $862 Million Amid Sharp Sell-Off

Mass Liquidations Hit Cryptocurrency Markets

The cryptocurrency market underwent a severe deleveraging event in the past 24 hours, with 168,040 traders liquidated worldwide for a total volume of $861.96 million, according to data from CoinGlass ^[2]. Long positions bore the brunt of the losses as Bitcoin and Ethereum experienced sharp price declines within a short timeframe ^[2].

Bitcoin led the liquidation figures with approximately $358 million in forced closures, followed by Ethereum at roughly $295 million ^[2]. The single largest liquidation occurred on the Bitget exchange, where a BTCUSDT-UMCBL position valued at $13.52 million was automatically closed ^[2]. These liquidations typically occur when highly leveraged positions fall below their required margin levels, often creating self-reinforcing effects that amplify market volatility ^[2].

Large Holders Accumulate Despite Downturn

Despite the market turbulence, Bitcoin's approximately 30% decline from all-time highs did not discourage major investors from increasing their positions throughout January ^[1]. Entities known as "sharks" — wallet addresses holding between 100 and 1,000 BTC — accumulated Bitcoin at their fastest pace since 2013, according to Glassnode data ^[1].

These entities, which typically include early adopters and institutional trading desks, continued buying even as Bitcoin corrected to around $87,900 from nearly $98,000 ^[1]. This accumulation pattern suggests that large investors view the current pullback as a strategic buying opportunity and maintain confidence in Bitcoin's longer-term bullish trajectory ^[1].

Historically, similar surges in shark accumulation have preceded significant rallies, including a roughly 160% price gain within a year and the mid-2024 movement that saw Bitcoin climb from approximately $54,000 to over $116,000 ^[1].

Technical Indicators Signal Continued Weakness

Beyond the liquidation figures, technical warning signs are accumulating across the market. Analysis from Alphractal reveals that the majority of altcoins currently trade with a daily Relative Strength Index (RSI) below 50 ^[2]. An RSI beneath this threshold indicates sustained selling pressure ^[2]. Simultaneously, the ratio of liquidations to open interest has elevated — a characteristic marker of environments where positions are being forcibly unwound ^[2].

Some analysts warn of further downside potential. Chartist Lofty suggested Bitcoin could decline to $35,000 in February, citing a "perfect bull trap" after Bitcoin failed to maintain levels above its rising channel's upper boundary ^[1]. He drew comparisons to Bitcoin's 2021 double top pattern, where successive breakout attempts trapped late buyers before a sharp, multi-month sell-off ensued ^[1].

However, several prominent cryptocurrency firms have challenged such bearish scenarios, arguing that Bitcoin's traditional four-year cycle is no longer applicable ^[1]. Grayscale Investments projected Bitcoin would reach a new record high in the first half of 2026 due to institutional adoption, while Bitwise predicted 2026 would be an "up year" for Bitcoin ^[1].

Macroeconomic Pressures Add to Market Uncertainty

The cryptocurrency downturn coincides with broader macroeconomic concerns. At the World Economic Forum in Davos, European Central Bank President Christine Lagarde warned about the consequences of new U.S. tariff threats ^[2]. She noted that the resulting uncertainty proves more damaging than the tariffs themselves, as businesses and investors delay critical decisions ^[2]. Such developments increase risk aversion across global financial markets, with notable impacts on speculative assets like cryptocurrencies ^[2].

Market participants were also focusing on an appearance by Donald Trump at the World Economic Forum, scheduled for approximately 15:00 CET ^[2]. Traders were particularly attentive to potential statements regarding trade conflicts with the European Union, though previous expectations for de-escalation have been repeatedly disappointed ^[2].

While the current liquidation wave underscores the cryptocurrency market's vulnerability during periods of high leverage usage, such deleveraging phases often serve a cleansing function by removing excessive risk from the market ^[2].