A brutal Monday for crypto as leverage finally bites

The crypto liquidation surge that tore through markets at the end of January has left traders nursing heavy losses and questioning whether the optimism that defined late 2025 ran too far, too fast.

More than $2.5 billion was wiped out in a single day as leveraged bets unravelled, placing the sell-off among the largest liquidation events in the history of digital assets. Long positions absorbed the overwhelming share of the damage as prices slipped sharply across Bitcoin, Ether and major altcoins.

Bitcoin fell to around $76,000 during the rout, losing more than three per cent in a single session. Ether fared worse, sliding over 20 per cent in a week to hover near $2,200, a level now viewed as critical support by traders.

The losses were not confined to crypto. Gold, long treated as a refuge during periods of uncertainty, dropped more than four per cent in a single day and has fallen sharply from recent highs. The move unsettled investors who had expected traditional safe havens to hold steady as risk assets wobbled.

“This was not a gentle correction,” one market analyst said. “It was a reminder that leverage, when it turns, moves faster than conviction.”

The scale of the crypto liquidation surge reflects how much capital has flowed into the sector since the 2022 lows. Total crypto market value has fallen by roughly $800 billion from autumn highs, a retreat that echoes earlier boom-and-bust cycles, though from a far higher base.

Industry tensions added to the sense of unease. The chief executive of OKX accused rival exchange Binance of encouraging excessive risk during a previous market shock through high-yield promotions tied to leveraged products. The claim has not been independently verified, but it has fuelled debate about responsibility during periods of extreme volatility.

Elsewhere, allegations involving Justin Sun and trading activity linked to multiple exchange accounts circulated widely online. While unproven, the claims added to a news cycle already heavy with uncertainty and distraction.

Michael Saylor, a prominent voice in Bitcoin advocacy, also appeared in unrelated media reports, though there was no suggestion of market impact. Even so, the accumulation of side stories has contributed to a sense of fatigue among investors.

Technically, some indicators suggest markets are approaching oversold territory. Ether’s relative strength index has dipped close to levels that in the past have preceded periods of consolidation. Bitcoin dominance has risen as traders retreat from riskier tokens, a familiar pattern during downturns.

Whether this proves a pause or the start of a deeper slide remains unclear. What is evident is that the crypto liquidation surge has exposed how quickly sentiment can reverse when leverage replaces caution.

For readers interested in understanding how leveraged derivatives amplify market moves, guidance on risk and margin trading is available through the Financial Conduct Authority.

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