Ethereum and Solana lead the decline as the crypto market suddenly crashes, dragging down U.S. stocks as well.

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On Monday, the cryptocurrency market experienced large-scale liquidations, with over $1.5 billion in long positions forcibly closed, triggering the most severe flash crash in nearly a month.

According to data from Coinglass, in the past 24 hours, over 407,000 traders were liquidated, with forced closures of bullish bets totaling more than $1.5 billion at one point. Ethereum was hit the hardest, with its price plunging 9% to $4,075, erasing nearly $500 million in leveraged long positions. Bitcoin was not spared either, dropping nearly 3% to $111,998. U.S. stock index futures fell before the market opened, with tech stocks broadly lower.

Market analysts believe this plunge was mainly caused by excessive leverage and the overheated rally in altcoins, resulting in a cascade of forced liquidations. Liquidations and margin calls triggered automatic sell orders, accelerating Bitcoin's decline. This chain reaction led to massive liquidations in a short period, causing the total market value of digital assets to fall below the $4 trillion mark.

George Mandres, senior trader at XBTO Trading, said:

“The market seems to need a breather, and some participants are worried that ‘digital asset treasury trades’ (DAT-trades) are losing momentum, with no meaningful additional capital inflows expected.”

The decline triggers a chain reaction

The decline that began over the weekend accelerated into widespread liquidations on Monday.

According to CoinGlass data, the liquidation amount in the past 24 hours hit $442 million, the highest since August 29. There was a one-hour peak of $1 billion in liquidations.

After Bitcoin fell below the critical support of $114,300, it triggered mass forced liquidations of long positions. Within just four minutes, the price of Bitcoin dipped below $112,000, then briefly rebounded to around $113,000.

In addition to mainstream tokens, this round of liquidations also affected $109.7 million in small-cap assets. Recently strong-performing tokens such as ASTER, WLFI, and PUMP also saw significant liquidations. Even BNB experienced limited long liquidations after rising from $900 to nearly $1,100.

Historically, long positions have always been the main bearers of liquidation losses. The last large-scale wave of liquidations occurred in February 2025, when $2.2 billion was liquidated in 24 hours, and about 700,000 traders lost their positions.

Technical indicators show oversold conditions, “altcoin season” ends abruptly

In this sell-off, Ethereum and various altcoins fell much more than Bitcoin. On Monday, while Bitcoin/USD fell about 2.5%, Ethereum's drop exceeded 6%. The ETH/BTC exchange rate suddenly dropped to 0.037, the lowest in a month.

Ethereum's price fell back to the $4,200 range. Although this is still a 26% increase from the beginning of the year, it marks a sharp pullback from its late-August historical high above $4,900. Meanwhile, Ethereum’s open interest dropped from about $30 billion recently to $27 billion, reflecting a cooling in derivatives market enthusiasm.

Liquidations and margin calls triggered more automatic sell orders, accelerating Bitcoin's decline. This chain reaction of forced liquidations is the main reason for the massive liquidations in a short time.

The Relative Strength Index entered an oversold region during the sharp decline, once falling below 20, highlighting the speed and severity of traders’ actions. Such deep oversold conditions are usually accompanied by liquidation-driven crashes, with price movements more a result of forced liquidations than organic selling.

Analysts believe that the recent weeks were not really an “altcoin season,” but rather a brief “semi-altcoin season” led by a few tokens such as BNB. When the excessive enthusiasm built up by these leaders fades, it triggers a chain decline across the whole market. Currently, Bitcoin’s market dominance has risen back to 56.2%, while Ethereum’s dominance has fallen to 12.8%.

Frenzy cools, market seeks a breather

Market analysts point out that this round of large-scale liquidations was mainly triggered by expectations of rising interest rates. Tight monetary policy typically puts pressure on alternative assets such as cryptocurrencies, as rising yields for safe assets like bonds and savings reduce the appeal of cryptocurrencies to investors.

This flash crash is widely seen as a correction to the market frenzy of the previous few weeks. In August, driven by demand from the so-called “digital asset treasury companies” (those that publicly announced they would hold cryptocurrencies as treasury reserve assets), Bitcoin and Ethereum both hit all-time highs.

Market analysts note that the current pullback is still within the range of normal volatility for the crypto market. Historically, “altcoin seasons” are relatively short, often lasting just a few weeks. On the bright side, DeFi lending protocols have not come under threat of large-scale liquidations, as most loan positions remain conservative, and mass liquidation levels are still far below current prices.

Risk Warning and DisclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it take into account the particular investment goals, financial situation, or needs of any individual user. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific situation. Investing based on this content is at your own risk. ```