The cryptocurrency market saw a sharp wave of forced liquidations on January 31, as accelerating downside pressure triggered a broad derivatives wipeout across major exchanges.
Total crypto liquidations exceeded $2 billion within 24 hours, marking one of the largest deleveraging events of the year. The majority of wiped positions were leveraged longs, caught offside as prices broke through key technical levels.
The sudden unwind erased tens of billions of dollars from the total crypto market capitalization, which dropped more than 7% intraday before stabilizing. The rapid decline underscored how quickly sentiment can shift in a highly leveraged environment.
Bitcoin and Ethereum Lead the Liquidation Cascade
Bitcoin and Ethereum accounted for the largest share of liquidations. Bitcoin saw roughly $700 million in positions wiped out as it slipped below short-term support, accelerating downside momentum.
Ethereum followed with an estimated $300–$350 billionin liquidations after breaking under the $2,500 zone and sliding toward $2,400. The loss of this key level intensified long squeezes across derivatives platforms.
Other major altcoins, including Solana and XRP, also experienced significant liquidations. In lower-liquidity tokens, volatility was amplified as cascading stop-loss orders triggered additional forced selling.
What Triggered the January 31 Deleveraging Event
Several factors combined to fuel the selloff. Technical breakdowns across major assets activated algorithmic trading systems and stop orders clustered below support zones. Elevated open interest in perpetual futures left the market vulnerable to a sharp long squeeze.
As prices declined, margin calls forced traders to close positions, creating a self-reinforcing cycle of selling. At the same time, broader macro uncertainty weighed on risk assets, further pressuring crypto markets.
While liquidation flushes often reflect panic-driven conditions, they can also reset overheated leverage and funding rates. Market participants are now watching whether the January 31 event signals the start of a deeper correction or a short-term reset before renewed consolidation.
