Crypto Prices May See Upside Despite Liquidations Near $1B, Here’s Why

In the past 24 hours, crypto traders saw one of the biggest wipeouts of the month. Over $970 million in long positions were liquidated across major exchanges, triggered by a sharp drop in crypto prices.

Even though the wiprout looked brutal, there are signs that this may not be the start of a deep downtrend. In fact, some data points suggest the market is preparing for a rebound.

Let’s look at what just happened and why it might not be all bad.

Crypto Liquidation Hits $240 Bln Sparking Concerns

The total crypto market cap dropped from about $4.35 trillion to $4.11 trillion in a matter of hours.

That’s a fall of over $240 billion, and it’s the biggest intraday drop since the last major correction earlier this year.

As crypto prices fell across Bitcoin, Ethereum, and altcoins, open positions got liquidated fast. Nearly $1 billion worth of longs were forced to close.

Most of these were high-leverage bets: traders borrowing money expecting prices to go up.

When the market moved against them, they couldn’t cover the losses, and exchanges automatically closed their trades.

This is what liquidation means: if you’re borrowing money to trade and the market drops too much, the platform takes your position and sells it to cover the debt.

In this case, that happened to thousands of traders almost at once.

Most Liquidations Were on Longs

Even though nearly a billion dollars in long trades got wiped out, the market didn’t crash fully.

The total market cap held above the key $4 trillion mark. Bitcoin only dipped slightly below $122,000 but quickly bounced back above that line.

This means while the sell-off looked violent, it didn’t break critical levels. It was more of a shakeout — clearing out over-leveraged traders, than a total collapse.

The largest single liquidation came from an ETH/USD trade worth $13.69 million, showing that even major positions weren’t safe in this flush.

Altcoin Leverage Was a Major Risk, and It Backfired

The data clearly shows that the biggest spike in liquidations happened in altcoins, not Bitcoin or Ethereum.

That’s because open interest, the total value of active futures contracts, rose sharply for coins like PEPE, DOGE, BONK, and SOL just before the crash.

When traders start taking big positions in risky coins using borrowed funds, the market becomes fragile. And when prices dip, it causes a chain reaction.

That’s what happened here. These coins saw sharp increases in open interest before the liquidation spike, and they led the drop once the flush started.

So, this wasn’t just a Bitcoin-led sell-off. It was a washout of high-leverage bets in altcoins, which were the most exposed.

But Stablecoin Reserves Are Climbing; That’s a Bullish Sign For Crypto Prices

Even though prices dropped, one key signal suggests buyers are preparing to jump back in: stablecoin inflows are rising.

Charts show that USDC reserves on exchanges are going up, which means traders are depositing stablecoins, like dry powder, to potentially buy the dip.

That’s not something you see in panic markets. It’s something you see in accumulation phases.

High-volume wallets, wallets that regularly make large trades, have also increased their activity during the dip.

This includes wallets linked to institutional traders and even ETF-linked entities like BlackRock, which appear to have been net buyers during the drop.

Yes, $970 million in crypto liquidations and a $240 billion market cap drop sound scary.

But the way the market behaved after holding the $4 trillion level — rising stablecoin inflows, and buying by large wallets — suggests this could have been a planned reset of leverage.