Crypto Markets Experience $864M in Liquidations in 24 Hours Amid Regulatory and Price Volatility

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Crypto markets recorded $864 million in liquidations within 24 hours, driven by price volatility and positioning shifts as of January 18, 2026. Bitcoin surged above $92,000 in response to soft core CPI data, signaling improved market sentiment. The move triggered $176 million in crypto liquidations, with short positions bearing the brunt.

The U.S. Congress has yet to pass the CLARITY Act, a crypto market structure bill that has faced resistance due to concerns over regulatory overreach. Coinbase, one of the bill's original supporters, recently withdrew its backing, citing issues like prohibitions on yield-bearing stablecoins and potential government access to DeFi user records.

Market analysts see a potential path for the CLARITY Act to evolve, mirroring the years of negotiation that led to the European Union's MiCA regulations. A revised version of the bill could provide the industry with clearer rules while balancing oversight.

The tokenization of real-world assets is fueling the expansion of trading platforms into multi-asset environments. Firms like Robinhood, Revolut, and Cash App are integrating crypto alongside stocks and other financial products. This trend is enabling 24/7 trading, faster settlement, and cross-border accessibility, accelerating convergence between traditional and digital finance.

Bitcoin's recent price movement reflects broader macroeconomic factors, including the Federal Reserve's cautious stance and Trump's public advocacy for rate cuts. Institutional investors are also adopting longer-term Bitcoin holding strategies, reducing short-term volatility and reinforcing price resilience.

Ethereum is addressing growing concerns over privacy erosion through an AMA on X, where it will outline potential strategies to reverse the trend. The event is expected to draw attention from both retail and institutional participants.

Why Did This Happen?

The liquidation surge followed a sharp price rally in Bitcoin and Ethereum, driven by a soft core CPI report and evolving regulatory dynamics. Short sellers faced significant losses, with $104 million in short liquidations recorded.

The CLARITY Act's stalled progress reflects broader industry concerns about regulatory overreach. Coinbase CEO Brian Armstrong criticized the bill's restrictions on stablecoin yields and DeFi access, leading to the firm's withdrawal of support.

How Did Markets React?

Crypto markets responded positively to the soft core CPI data, with Bitcoin rising nearly 1.8% to $93,000. Institutional buying and reduced short exposure contributed to a bullish sentiment, even as major stock indexes saw minor declines. According to reports, the rally was driven by improved market sentiment.

XRP investors showed renewed interest as legal uncertainties diminished and a proposed U.S. Senate bill aimed to equalize its regulatory treatment with Bitcoin and Ethereum. XRP-linked futures open interest reached $4.03 billion, showing strong leverage use.

What Are Analysts Watching Next?

Analysts are closely monitoring the ongoing negotiations around the CLARITY Act. A revised version that aligns with industry interests could foster clarity and stability while avoiding stifling innovation.

The tokenization of everything—from real estate to private company shares—continues to gain traction. This trend supports the convergence of traditional and digital assets, with platforms like Genius Trading aiming to unify onchain execution across multiple blockchains. According to reports, this could represent a significant shift in market dynamics.

Institutional Bitcoin adoption is another focal point, with companies planning larger Bitcoin treasuries to reduce volatility and enhance long-term value. Corporate custodial strategies are also influencing the market structure by limiting short-term supply fluctuations.