The cryptocurrency market saw a turbulent day on January 20, 2026, as a widespread deleveraging event led to over $1 billion in liquidations. This market shakeup affected more than 182,000 traders, hitting leveraged positions hard and leaving many investors with significant losses.
What Triggered the $1 Billion Liquidation?
During the 24-hour period ending on January 20, data from CoinGlass revealed that over $1.08 billion in assets were liquidated. A staggering $1 billion of those came from long positions, while short liquidations were much lower, totaling $79.67 million. Major digital assets like Bitcoin (BTC) and Ethereum (ETH) bore the brunt of these liquidations, with $427.06 million and $374.47 million wiped out, respectively.
One of the largest single liquidations occurred on the Bitget exchange, involving a BTCUSDT_UMCBL position valued at $13.52 million. Other major exchanges, including Hyperliquid, Bybit, and Binance, reported collective liquidations exceeding $287 million within just four hours.
The Mechanism Behind Liquidations
Liquidation happens when an exchange closes a leveraged position due to insufficient margin to cover losses. As traders use borrowed money to boost their trades, market movements against their positions trigger automatic sales, which further depress asset prices. This “cascading effect” compounds losses and heightens market volatility.
The Impact on Traders
Notable investors weren’t spared. Machi Big Brother, a well-known crypto trader, endured five liquidations in a single day, amassing total losses of $24.18 million. His remaining holdings of 2,200 ETH, valued at $6.67 million, risk further losses if Ethereum’s price drops below $2,991.
Beyond individual traders, technical market indicators signal broader stress. Most altcoins recorded a daily Relative Strength Index (RSI) below 50, indicating bearish market sentiment. Additionally, the liquidations-to-open-interest ratio spiked, reflecting widespread forced selling across the market.
Global Macroeconomic Factors at Play
In addition to internal crypto market dynamics, external macroeconomic events have amplified the selloff. On the same day, Japan’s bond market experienced a significant shift, with 30-year Japanese Government Bond (JGB) yields soaring 25 basis points to 3.86%. Rising rates in Japan are pressuring global liquidity as investors withdraw funds from riskier assets like cryptocurrency and funnel them into safer alternatives.
The World Economic Forum (WEF) in Davos has also added to uncertainty. Discussions around cryptocurrency regulations during the event have the potential to create further ripples across the market, especially as governments and regulators globally seek tighter oversight of digital assets.
What Lies Ahead?
This recent event highlights the risks of over-leveraging in volatile markets like crypto. Risk management strategies such as proper position sizing and reduced leverage are critical for traders looking to weather uncertain conditions.
A potential rebound in crypto prices remains uncertain in the short term, with continued bearish sentiment and depleted capital keeping markets muted. However, as crypto prices drop, new entry points may attract fresh capital, offering hope for eventual stability.
Protect Yourself in the Market
For those navigating the crypto market turbulence, incorporating tools to monitor market trends is essential. Consider using Binance crypto trading services (here) to simplify your trading experience. Binance offers advanced stop-loss features to help protect your positions during volatility.
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