Bitcoin News Today: Leverage Backfires: $500M Crypto Liquidations Trigger Fragility Fears

Over the past 24 hours, the cryptocurrency market has experienced a significant wave of liquidations, with leveraged long positions across Bitcoin and Ethereum suffering over $500 million in forced sell-offs. This sell-off came amid heightened macroeconomic concerns, particularly in light of unexpectedly high U.S. July wholesale inflation data, which dampened expectations for a Federal Reserve rate cut in September. The price of Bitcoin fell to an intraday low of $112,578, while Ether dropped to $4,064, before showing partial recovery. According to data from CoinGlass, approximately $124 million in Bitcoin long positions and $184 million in Ethereum long positions were liquidated during the same period. These forced sell-offs were driven by traders being unable to meet margin requirements, compounding downward pressure on prices [1].

The liquidation levels reflect the broader fragility of the crypto market, especially for leveraged traders. CoinGlass data revealed that more than 115,000 traders were impacted by the selloff, as Bitcoin and Ethereum faced sharp corrections. High leverage exposure created a domino effect of forced selling, pulling major altcoins into the red. Ethereum, in particular, appeared vulnerable if its price continued to fall below $4,200, with over $236 million in ETH long positions at risk of liquidation near $4,170 [2]. Analysts such as Andrew Kang from Mechanism Capital warned that if the liquidation cascade continued, Ethereum could potentially drop to as low as $3,600, with overall ETH liquidations across exchanges potentially reaching $5 billion [2].

Despite the bearish sentiment, some analysts suggested that the crash could be part of a broader whale accumulation phase. Crypto analyst CrypNuevo noted that Bitcoin’s recent all-time high was followed by a $1 billion liquidation event, a development he interpreted as a strategic move to flush out retail traders. He suggested that institutional players may be scooping up Bitcoin at discounted prices amid the market turmoil. If this trend continues, the dip could provide a catalyst for the next bull run once leveraged positions are reset and selling pressure is reduced [2].

The market volatility coincided with growing bearish sentiment and speculation about a potential short squeeze. Bitcoin briefly returned to $116,000 as bulls attempted to push into a cluster of short positions. At the same time, speculative ETH traders had built the largest-ever leveraged short position on the altcoin, according to data from CME Group. Traders and analysts like BitBull and Michaël van de Poppe expressed cautious optimism, noting that if Bitcoin fails to break above $116,800, it could signal the start of a bear market [3]. Meanwhile, CoinGlass identified a key short liquidation level for Bitcoin at $116,500, highlighting the potential for a short squeeze if the price stabilizes in that range [3].

The market’s focus is now on macroeconomic developments, particularly the Federal Reserve’s Jackson Hole symposium, where central bank officials will provide insights into future monetary policy. Higher-than-expected producer price index (PPI) numbers have complicated the Fed’s policy framework, making investors keenly aware of any hints about rate cuts. Trading firm QCP Capital noted that sideways trading is likely until the Fed’s September policy meeting, with dips near $112,000 attracting buyers and rallies toward $120,000 encountering resistance [3]. The coming days will be critical in determining whether Bitcoin can stabilize above $115,000 and whether Ethereum can hold its $4,200 level without triggering further liquidation waves [2].

Source:

[1] https://www.cnbc.com/2025/08/18/crypto-market-today.html

[2] https://www.mitrade.com/insights/news/live-news/article-3-1049267-20250819

[3] https://cointelegraph.com/news/bitcoin-ether-eye-short-squeeze-as-traders-build-largest-ever-eth-short

[4] https://unchainedcrypto.com/over-500-million-liquidated-as-crypto-selloff-accelerates/

[5] https://www.panewslab.com/en/articles/21mb57ms