Crypto derivatives markets forcibly closed more than $19 billion in leveraged positions on Oct. 10, 2025, hitting 1.6 million traders in roughly 24 hours. 2026 has already delivered three more billion-dollar liquidation events, and data shows leverage rebuilding after each one.
How a single move triggers a cascade
Most crypto speculation runs through perpetual futures, contracts that let a trader control a large position with a fraction of it as margin. When a price move erodes that collateral past its maintenance threshold, the position is sold automatically into the market.
That forced sale is where cascades start. Each liquidation pushes the price down further, tripping the next trader's threshold and triggering another sale.
Exchanges run insurance funds to absorb the shortfall, but when a fund can't keep up, platforms turn to auto-deleveraging, closing profitable traders' positions on the other side of the trade. Thin overnight and weekend order books then produce the sharp price wicks that make cascade lows deeper than ordinary spot selling would explain.
The day the dominoes fell
On Oct. 10, 2025, President Trump announced a 100% tariff on Chinese imports, and equities and commodities sold off alongside crypto. More than $19 billion in leveraged positions were wiped out across Oct. 10-11, with about $16.7 billion of it long positions.
Total perpetual futures open interest across major exchanges collapsed 43% in a day, from $217 billion to $123 billion. Hyperliquid's open interest fell 57%, from $14 billion to $6 billion, and market makers estimated the true liquidation total may have approached $30-40 billion once undisclosed positions were counted.
2026 keeps repeating the pattern
Traders rebuilt their leverage, and on Jan. 20, 2026, more than 182,000 traders lost over $1.08 billion in a single day, nearly all of it long bitcoin and ethereum futures positions.
Twelve days later, on Feb. 1, so-called "Black Sunday II" forcibly closed roughly $2.2 billion in positions within 24 hours, hitting over 335,000 traders. Ethereum led the damage at $961 million liquidated, bitcoin followed at $679 million, and Solana added $168 million, as bitcoin briefly broke below $76,000.
June brought the year's deepest spot damage, as bitcoin slid from about $67,000 to $59,100 in 48 hours, triggering over $3 billion in forced liquidations, including a single worst day near $1.8 billion.
Open interest has rebuilt after every flush this year. Funding rates, the periodic payments longs and shorts make to each other, tend to flash the warning first, since heavy payments from crowded long positioning can mean a modest dip is enough to start the dominoes again.
Source: Bitcoin News
Trading involves risk.
Risk Disclaimer
