Crypto's Domino Effect: $1.5B Liquidated as Altcoins Crumble

Ethereum and Bitcoin experienced a sharp selloff in September 2025, driven by over $1.5 billion in liquidated long positions, according to market data. Ethereum plummeted nearly 9% to $4,075, with approximately $500 million in leveraged positions forced to close, while Bitcoin dropped almost 3% to $111,998. The cascading margin calls pushed the total crypto market capitalization briefly below $4 trillion, triggering panic among traders Invezz^[1]. Smaller tokens, including Solana and XRP, suffered even steeper losses due to lower liquidity, with over 400,000 traders losing positions in 24 hours Invezz^[1].

The selloff was fueled by a combination of factors. Traders had been heavily leveraged during a recent crypto rally, leaving positions vulnerable to price corrections. Regulatory scrutiny, particularly from the U.S. Securities and Exchange Commission (SEC) targeting crypto ETFs and stablecoins, further eroded market confidence. Additionally, uncertainty around global interest rates and economic conditions contributed to a risk-off sentiment, spilling into crypto markets Invezz^[1].

Ethereum bore the brunt of the liquidation, with $309.7 million in leveraged longs wiped out in a 24-hour period, according to on-chain analytics. Bitcoin’s market dominance rose to 56.4%, as investors rotated toward larger, more "stable" assets amid the turmoil Coingabbar^[2]. The Fear and Greed Index, a sentiment indicator, fell to 45 (Fear), reflecting a sharp shift in investor psychology from optimism to caution Coingabbar^[2].

Analysts attributed the volatility to structural weaknesses in leveraged trading. Over $1.7 billion in liquidations occurred within a single day, with whale-driven activity exacerbating price swings. For instance, a single large wallet deposited $15 million in USDC into Hyperliquid to re-enter long positions on Bitcoin and Solana after the crash, underscoring the role of institutional players in amplifying market swings Coingabbar^[2].

Looking ahead, the market’s trajectory hinges on key support levels. Ethereum’s ability to hold above $4,200 and Bitcoin’s resilience near $113,000 will be critical in determining whether the selloff stabilizes or deepens. Analysts warn that without fresh institutional inflows or clearer regulatory signals, volatility is likely to persist, particularly for leveraged traders Invezz^[1].

The event highlights the fragility of leveraged positions in crypto markets. While Bitcoin’s dominance increased during the selloff, smaller altcoins continued to underperform, with Ethereum’s market share dropping to 12.7%. Traders are now closely monitoring upcoming U.S. economic data, including Federal Reserve Chair Jerome Powell’s speech and inflation reports, which could further influence market sentiment Coingabbar^[2].

Invezz^[1]: Invezz, "Crypto Markets Crash: $1.5B Liquidated as Ethereum, Bitcoin Lead Monday Selloff"

Coingabbar^[2]: Coingabbar, "Why Crypto Is Down Today: Tariffs, Fed Cuts, and Whale Liquidations"