24-hour market-wide liquidation recap: This sell-off was no accident
Many are puzzled: Why did we see a sudden wave of liquidations when the market seemed to be ranging?
In a nutshell: Spot institutions pulled out funds, draining liquidity + crowded long leverage = precise chain liquidation
Let me break down the core logic behind this 24-hour liquidation:
1. The main culprit: Significant net outflow of spot funds in the US market, completely wiping out bottom-buying
Yesterday, the US saw a net outflow of $469 million in BTC and ETH
This is the real culprit behind this round of decline.
Previously, the market was stable thanks to ETF institutions continuously propping up the bottom.
But recently, institutions have been continuously withdrawing from compliant channels, redeeming funds, and there’s no new cash entering the market—only existing capital competing.
Once the institutional support disappears, the market support directly breaks down, and even a slight sell-off can breach key levels.
2. Direct cause of liquidation: Overcrowded long leverage
During the ranging period, market sentiment was optimistic, with numerous retail traders and short-term funds continually opening long positions at low levels and increasing their exposure.
This led to a deadly structure:
Overall long positions across the network became highly concentrated, with overall leverage being too high
When the market ranges, issues aren’t apparent, but once it breaks slightly:
- High-leverage longs are the first to trigger forced liquidations
- Systems automatically sell off → prices continue to drop
- Triggering more stop-losses and liquidations
Creating a classic loop of decline → liquidation → cascading sell-off.
3. Macro sentiment continues to suppress, denying any rebound opportunity
The expectation for Fed rate cuts has weakened, US Treasury yields are rising, and the dollar’s attractiveness is rebounding.
Overall risk appetite for assets is cooling, and the crypto market lacks external incremental liquidity; all rebounds are low-volume rebounds, heavily pressured.
In a weak external sentiment environment, funds are more inclined to reduce positions on rallies rather than buy the dip.
4. Differentiation among coins: ETH's drop and liquidation are harsher than BTC's
In this round of market movement, ETH is clearly weaker than BTC
The reasons are simple:
- ETH faces greater spot redemption pressure
- Derivative leverage concentration is higher
- Fund confidence is weak, leading to concentrated sell-offs at the slightest fluctuation.
Many are puzzled: Why did we see a sudden wave of liquidations when the market seemed to be ranging?
In a nutshell: Spot institutions pulled out funds, draining liquidity + crowded long leverage = precise chain liquidation
Let me break down the core logic behind this 24-hour liquidation:
1. The main culprit: Significant net outflow of spot funds in the US market, completely wiping out bottom-buying
Yesterday, the US saw a net outflow of $469 million in BTC and ETH
This is the real culprit behind this round of decline.
Previously, the market was stable thanks to ETF institutions continuously propping up the bottom.
But recently, institutions have been continuously withdrawing from compliant channels, redeeming funds, and there’s no new cash entering the market—only existing capital competing.
Once the institutional support disappears, the market support directly breaks down, and even a slight sell-off can breach key levels.
2. Direct cause of liquidation: Overcrowded long leverage
During the ranging period, market sentiment was optimistic, with numerous retail traders and short-term funds continually opening long positions at low levels and increasing their exposure.
This led to a deadly structure:
Overall long positions across the network became highly concentrated, with overall leverage being too high
When the market ranges, issues aren’t apparent, but once it breaks slightly:
- High-leverage longs are the first to trigger forced liquidations
- Systems automatically sell off → prices continue to drop
- Triggering more stop-losses and liquidations
Creating a classic loop of decline → liquidation → cascading sell-off.
3. Macro sentiment continues to suppress, denying any rebound opportunity
The expectation for Fed rate cuts has weakened, US Treasury yields are rising, and the dollar’s attractiveness is rebounding.
Overall risk appetite for assets is cooling, and the crypto market lacks external incremental liquidity; all rebounds are low-volume rebounds, heavily pressured.
In a weak external sentiment environment, funds are more inclined to reduce positions on rallies rather than buy the dip.
4. Differentiation among coins: ETH's drop and liquidation are harsher than BTC's
In this round of market movement, ETH is clearly weaker than BTC
The reasons are simple:
- ETH faces greater spot redemption pressure
- Derivative leverage concentration is higher
- Fund confidence is weak, leading to concentrated sell-offs at the slightest fluctuation.