Cryptocurrency markets shed $2.65 billion in liquidations over the past 24 hours as a structural downturn that began in October erased $2.2 trillion in total market capitalization, though some analysts now see signs that forced selling may be approaching exhaustion.
What Happened: Record Liquidation Wave
CoinGlass data showed 586,053 traders were liquidated in a 24-hour period, with long positions accounting for more than $2.2 billion of the $2.65 billion total. The figures place the event near the threshold for the Top 10 Crypto Liquidation Events of All Time — the smallest entry on that list, recorded Jan. 31, totaled $2.56 billion.
Market analysis account The Kobeissi Letter attributed the selloff to weak liquidity, negative sentiment and cascading liquidation pressure rather than a single short-term catalyst.
Bitcoin (BTC) market depth currently sits at just 30% of its October peak, a condition the account compared to the post-FTX collapse environment in 2022.
Intraday Bitcoin price swings reached as much as $10,000 due to the reduced depth. A BeInCrypto report noted that panic selling pushed several crypto treasuries toward rising bankruptcy risk, with Bitcoin's drop to $60,000 moving MicroStrategy's holdings below cost basis.
Veteran technical analyst Peter Brandt suggested Bitcoin could find support near $42,000 based on the "Bitcoin Power Law" model. "If Bitcoin digs into the banana peel as deeply as in past bear market cycles, then the bulls should not need to suffer too far south of $42,000," Brandt wrote.
Also Read: Analysts Eye $730 As BNB's Last Stand Before Mid-$600s
Why It Matters: Capitulation Signal Emerging
Glassnode reported that Bitcoin's capitulation index recorded its second-largest spike in two years, a metric that tracks supply distribution across price levels and measures market stress to identify potential local bottoms. Large-scale liquidations reduce overall market leverage, a process that historically shifts activity from leveraged speculation toward spot accumulation.
"Bitcoin deleveraging may create a strong opportunity soon," economist Daniel Lacalle noted.
These stress events often coincide with rapid de-risking and heightened volatility as lower-conviction holders exit. The observations suggest a buying opportunity may be forming, though they offer little clarity on when a recovery might begin.
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