Crypto market experienced a significant downturn on Monday, resulting in over $500 million in long liquidations. This sharp pullback erased the previous gains, with Bitcoin falling from its weekend highs. The event was triggered by a de-escalation of US-China trade tensions.
Coinglass data reveals that over $530 million in long positions were liquidated within 24 hours. Bitcoin-tracked futures accounted for nearly $200 million of these losses, while Ether (ETH) products contributed approximately $170 million. Liquidations occur when exchanges forcibly close leveraged positions due to insufficient margin—a situation where traders lack the funds to maintain their open trades.
Major cryptocurrencies suffered significant losses. Dogecoin (DOGE) and Cardano (ADA) each dropped by as much as 7%, while Solana (SOL), XRP, and BNB Chain’s BNB experienced declines between 5% and 6%. This marked a reversal from the previous week’s rally, which saw ETH surge by 40% and other major altcoins experience double-digit percentage gains driven by short squeezes. This rally had resulted in over $1 billion in short liquidations—the highest since 2021— briefly pushing Bitcoin above $104,000 before momentum waned.
The market downturn began during US trading hours following reports of a temporary tariff truce between the US and China. Both nations agreed to remove several mutual levies and pledged renewed trade cooperation. While this eased tensions in the equity markets, it seemingly dampened the risk-on sentiment that had fueled crypto’s recent surge. Coinglass data also showed a significant decrease in futures open interest across major exchanges—a reduction of over $1.2 billion, indicating substantial deleveraging as long traders were forced to exit their positions.
Analysts are cautious, suggesting that the recent market correction might reset overheated sentiment. The focus now shifts to the upcoming Federal Reserve meeting in June. Jeff Mei, COO of BTSE, highlights macro concerns as the primary market driver, emphasizing the June Fed decision and outlook as crucial factors in determining Bitcoin’s future trajectory and potential surpassing of its previous all-time high. He suggests that positive economic stimulus could drive growth and alleviate recessionary fears.
