Crypto Market Sees $1.29 Billion Liquidation Amid Bitcoin Rally

The cryptocurrency market witnessed a significant event on July 10-11, 2025, with a record-breaking short liquidation that saw over $1 billion in forced closures. This event, the largest since 2021, was driven by substantial price surges in major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), and Ripple (XRP). The liquidation affected over 237,000 traders, highlighting the extensive use of leveraged trading and the associated risks.

The immediate impact of this liquidation was a marked increase in price volatility, prompting traders to reassess their risk management strategies. The event underscored the systemic risks inherent in leveraged trading, where sudden price movements can lead to forced liquidations and significant financial losses. The absence of major executive commentary or regulatory actions following this event suggests that the market is still grappling with the implications of such large-scale liquidations.

The price rallies that triggered these liquidations also sparked discussions about the need for better financial safeguards and risk control measures. Traders who were caught off guard by the sudden price movements faced considerable losses, leading to calls for enhanced industry regulations and technological strategies for risk assessment. The goal is to create a more stable trading environment that can better withstand sudden market shifts.

The rally in Bitcoin was driven by several factors, including significant institutional flows and strong regulatory momentum. The dovish minutes from the Federal Reserve acted as a catalyst for riskier assets, including cryptocurrencies. Between Thursday and Friday, a total of $1.29 billion was wiped out, with over $1.14 billion coming from short liquidations. This marked the highest single-day liquidation event on record. Bitcoin accounted for nearly $681 million of the liquidated shorts, followed by Ethereum at nearly $262 million. The total liquidation in the crypto market reached $1.13 billion in the past 24 hours, with 89% of these being short positions. The largest single wallet liquidation was for $88.55 million.

The rally in Bitcoin was driven by several factors, including enormous institutional flows and strong regulatory momentum. BlackRock’s iShares Bitcoin Trust surpassed the $80 billion mark, indicating significant institutional interest. The House of Representatives declared the week of July 14 as "Crypto Week," during which lawmakers considered key legislation that could provide regulatory clarity for the crypto industry. This regulatory transformation has unleashed institutional demand that was previously bottled up due to political uncertainty.

A big short squeeze also contributed to the rally. As Bitcoin broke through all-time highs, short traders using perpetual futures got liquidated, adding to the velocity of Bitcoin’s upside move. This liquidation acted as a market order, amplifying the momentum in thin-liquidity environments. The rally was supercharged by a sharp short squeeze, which typically accelerates momentum in such environments. CoinGlass data showed that more than $2 billion was liquidated on July 10, marking the highest short liquidation in four years.

Analysts noted that Bitcoin has held up well during times of geopolitical turmoil, reinforcing its "safe haven" narrative. The new all-time high was not surprising, given the strong institutional flows and regulatory momentum. However, the delay in reaching this high was attributed to uncertainty around tariffs, which pushed the cycle out further than previous ones. Analysts predicted that there would likely be another correction before a final push to around $150,000 in the first or second quarter of the next year. The structural move higher in US debt and government spending creates a favorable backdrop for Bitcoin, with some analysts predicting it could reach $130,000 to $150,000 within a short period.

The rally also benefited crypto-adjacent stocks, including bitcoin miners and other related companies. The liquidation event highlighted the volatility and risk associated with short positions in the crypto market, as well as the potential for significant gains during periods of strong institutional demand and regulatory clarity.