Bitcoin News Today: Crypto's Leverage Purge: $20B Liquidation Tests Bitcoin's $106K Support

Bitcoin traders are closely analyzing historical chart patterns from 2020 and 2024 to assess the market's trajectory following a $20 billion liquidation event triggered by escalating U.S.-China trade tensions. The selloff, which saw Bitcoin (BTC) drop to $101,500 and Ethereum (ETH) plunge to $3,373.67, was precipitated by President Donald Trump's announcement of 100% tariffs on Chinese imports and export controls on critical software. This move, described as the "largest liquidation event in crypto history," wiped $400 billion from the cryptocurrency market cap, according to Coinglass and Coin360.

Technical analysts highlight parallels between the October 2025 crash and prior volatility spikes in 2020 and 2024. During the 2020 pandemic crash, Bitcoin briefly breached the $3,800 support level before rebounding, while the 2024 liquidation event saw a similar pattern of forced selling followed by a recovery. Current traders are monitoring key support levels around $106,000 for Bitcoin and $3,700 for Ethereum, areas where historical liquidation clusters have acted as reversal points. Liquidation heatmaps from platforms like Coinperps and Binance reveal concentrated short positions near these levels, suggesting potential for a short squeeze if buyers re-enter the market.

The liquidation data underscores the role of leverage in amplifying market moves. Over $19.1 billion in leveraged positions were liquidated within 24 hours, with $16.7 billion from longs and 1.6 million traders affected. Analysts at Bitunix Research note that such deleveraging events often precede stabilization, as seen in the March 2023 flash crash and May 2021 China mining ban. "The current correction appears to be a purge of excess leverage rather than a structural failure," one report stated, adding that Bitcoin's ability to hold above $108,000 could signal a resumption of the bull trend.

Macroeconomic factors remain pivotal. The tariffs' impact on global supply chains and inflation expectations has caused broader market uncertainty, with the S&P 500 and Nasdaq falling 2–3.6% on the same day. However, crypto-specific indicators show mixed signals. Open interest on derivatives platforms dropped 10% in 24 hours, while funding rates for Bitcoin and Ethereum perpetual futures turned deeply negative, reflecting a shift toward short positioning. Institutional outflows from CME Bitcoin futures and ETFs further suggest risk aversion, though long-term holders have remained relatively stable, according to on-chain data.

Market participants are divided on the outlook. Some view the crash as a necessary correction, with Morgan Stanley's expanded crypto access and ETF inflows signaling long-term institutional adoption. Others warn of prolonged volatility if trade tensions escalate. "The market's resilience will depend on Bitcoin reclaiming $120,000 and the Fed's ability to balance inflation and growth," said analysts at Coindesk. For now, traders are using tools like liquidation heatmaps and RSI indicators to identify entry points, with many betting on a V-shaped recovery as leverage normalizes and macro risks abate.