Bitcoin News Today: Crypto's FTX-Era Chaos: $5.5M Wipeout in Record Liquidation

A record-breaking liquidation of a Bitcoin short position on HyperLiquid last weekend wiped out $5.5 million for a trader who had amassed a $168 million leveraged bet ahead of a market rebound. The event, the largest single liquidation in crypto history, underscores the escalating volatility and risk-taking in the derivatives market as traders bet aggressively on sharp price swings.

The trader, who previously funneled hundreds of thousands into crypto casinos like Stake and Roobet, shorted BTC, XRP, and ZEC in a leveraged position worth $168 million. Despite the wipeout, they doubled down with another $115 million in shorts on GMX, which remain open with $1.4 million in unrealized gains. This pattern mirrors the high-stakes blowups of pseudonymous trader James Wynn, who lost $100 million earlier this year after going long at a market peak.

The liquidation occurred amid a broader wave of market stress. Over the past 24 hours, $1.1 billion in positions were liquidated, with $968 million from longs and $131 million from shorts. HyperLiquid and Bybit led the exodus, with $134 million and $122 million in long liquidations, respectively. Analysts likened the chaos to the 2022 FTX collapse, with Bitcoin's Relative Strength Index (RSI) hitting oversold territory not seen since 2022.

Bitcoin's price briefly dropped to $93,000 early Monday, triggering $510 million in liquidations and erasing all year-to-date gains for 2025. The dip pushed the Fear and Greed Index to 10, signaling extreme fear among traders. Market analyst KillaXBT warned that a break below $85,000 would invalidate bullish recovery scenarios.

The liquidation frenzy extended beyond Bitcoin. Ethereum briefly fell below $3,100, with BitMEX co-founder Arthur Hayes liquidating $4.1 million in crypto assets, including 780 ETH. Meanwhile, two dormant Ethereum wallets from the ICO era reawakened, moving 1,200 ETH worth $3.7 million.

The market's turbulence has also impacted ETF flows. Canary's XRP ETF debuted with $58 million in trading volume, but the firm paused new filings pending regulatory clarity. Ether ETFs, however, continued to bleed over $1.4 billion in outflows since late October.

Technical indicators suggest a fragile recovery. Bitcoin's drop below its lower volatility band - a first in three years - signals severe stress. While some analysts see a potential rebound, others warn of a bear market consolidation. "The current sentiment is reminiscent of the FTX era," said market analyst Negentropic, noting that Bitcoin's RSI remains in oversold territory.

As the market digests these developments, the focus shifts to whether institutions will stabilize the sector or exacerbate volatility. With leveraged traders on edge and regulatory scrutiny intensifying, the path forward remains fraught with uncertainty.

---