Crypto Crash: Liquidations Top $2.5 Billion as Bitcoin, Ethereum and XRP Prices Plummet

Cryptocurrency markets faced their worst sell-off in years on January 31, 2026, with Bitcoin, Ethereum, and XRP all plunging amid widespread liquidations. Over $2.5 billion in long positions were wiped out as traders scrambled to cut losses. The collapse coincided with a broader risk-off sentiment, fueled by macroeconomic uncertainty and geopolitical tensions.

XRP experienced a particularly sharp drop, with $72 million in liquidations reported. The altcoin traded below $1.72, triggering a wave of forced deleveraging. Despite the price decline, on-chain data showed a return of XRP whale wallets, signaling potential accumulation by large holders.

The 21Shares XRP ETF has continued to gain traction despite the recent volatility. The fund reported net assets of $279.9 million as of Q3 2025, showing a 27% increase from the previous quarter. The ETF's net asset value per share rose by 34% over the same period, reflecting strong institutional interest in the asset.

Why Did This Happen?

The sell-off was driven by a confluence of factors. The Federal Reserve's decision to maintain interest rates and its hawkish tone during the press conference reduced appetite for high-risk assets. Geopolitical tensions in the Middle East and uncertainty around the next Fed chair nomination added to the risk-off environment.

Additionally, leverage and liquidity issues in the market worsened the decline. As prices fell, market makers pulled liquidity, exacerbating the sell-off. Binance attributed the October 10 flash crash to a macro shock and heavy leverage, rather than exchange failure.

How Did Markets Respond?

Bitcoin fell below $84,450, with Ethereum dropping below $2,800 and XRP hitting key support levels. The price action was accompanied by significant open interest and long liquidation data. Over $405 million in long positions were liquidated on Friday alone, with further losses reported on Thursday.

Ethereum's co-founder, Vitalik Buterin, announced a withdrawal of $44.7 million in ETH to support growth initiatives. The Ethereum Foundation has entered a period of 'mild austerity' to maintain its long-term sustainability while pursuing ambitious technical goals.

What Are Analysts Watching Next?

Analysts are closely monitoring the behavior of major asset managers and ETF flows. BlackRock has continued to focus on Bitcoin and Ethereum ETFs while showing no immediate plans for an XRP or Solana ETF. However, the firm's potential future basket product could offer broader exposure to crypto assets.

Institutional interest in XRP has remained strong despite the volatility. ETFs such as the 21Shares XRP ETF continue to attract inflows, with rising net asset values and growing institutional adoption. If this trend continues, XRP could see more liquidity move into ETFs rather than exchanges.

Looking ahead, market participants are watching for signs of stabilization in Bitcoin and Ethereum. Structural improvements in ETF participation, renewed institutional mandates, and a return of retail inflows will be key factors in any potential recovery in 2026.