Emily Walker
This past weekend, the cryptocurrency market experienced its most significant drop in months, largely driven by the introduction of new US tariffs affecting Canada, Mexico, and China. The market’s performance at the beginning of February was predominantly negative, with a substantial 21% decline from the highs achieved on Friday.
The situation led to a massive liquidation of leverage positions worth billions of dollars. Initial assessments might have underestimated the total impact, as the CEO of Bybit indicated that the figure could exceed the $2 billion that was originally reported.
February Begins with Major Market Decline
As February kicked off, President Trump announced fresh tariffs on major trading partners including Canada, Mexico, and China. The decision included a new 25% tariff on imports from Canada and Mexico, alongside a 10% tariff on Chinese goods.
Following this announcement, the cryptocurrency market plummeted from its previous highs, with Bitcoin (BTC) experiencing a 12.5% drop to approximately $91,000 over the weekend. In tandem, Ethereum (ETH), the second-largest cryptocurrency by market cap, saw a decline of over 35%, reaching a low of $2,100, its lowest mark since September.
Concerns over a potential global tariff conflict caused many altcoins to hit monthly lows, signaling a retreat back to levels seen before the December rally. Consequently, the total capitalization of the crypto market decreased by 21% over the weekend, marking its biggest correction since the notable decline in August 2024.
A report from Nansen highlighted that the crypto market appears to be “saturated with good news for now,” revealing a heightened sensitivity to negative shifts in sentiment, similar to the correction triggered by DeepSeek in the previous week.
This dramatic market shift prompted significant leverage liquidations, with preliminary figures estimating over $2 billion. This represents an unprecedented single-day drop surpassing that of both the COVID-19 sell-off and the FTX collapse.
Projected Liquidations Exceed Initial Estimates
On Monday, the co-founder and CEO of Bybit, Ben Zhou, provided insight into the actual value of the crypto liquidations that occurred recently. In a post on X, he asserted that the total is likely “much greater than $2 billion.”
His estimates placed Bybit’s 24-hour liquidations at around $2.1 billion, indicating a 530% increase compared to the $333 million noted by CoinGlass. Zhou clarified that due to API restrictions, CoinGlass was unable to capture all liquidation events accurately.
Just a heads up, Bybit’s 24-hour liquidation data was $2.1B. As highlighted in the screenshot below, Coinglass showed only about $333m, not accounting for all the liquidations due to API feed limitations.
Zhou speculated that other exchanges may face similar issues with liquidation reporting, thereby suggesting that the true liquidation total could range between $8 billion to $10 billion, much higher than the recorded $2.3 billion.
Addressing concerns from users about differences in reported figures during the FTX collapse, Zhou estimated that actual liquidation values were “at least 4-6 times more” than what was initially disclosed.
He concluded by promising greater transparency in the future, announcing that Bybit will enhance its data sharing protocol for liquidation statistics.
