Crypto market crash

Crypto Markets Plunge $10B in Historic Liquidation Frenzy: What Really Happened?

February 5, 2025

The cryptocurrency market endured a seismic shakeup yesterday, with billions wiped out in a matter of hours. While initial reports suggested $2.3 billion in liquidations, the true scale of the carnage was far worse—hidden by technical glitches and a perfect storm of geopolitical chaos. Here’s the inside story of how the crash unfolded, why it matters, and what comes next.

The Trigger: Trump’s Tariff Bomb

At the heart of the crash was a surprise announcement by former U.S. President Donald Trump, who revealed aggressive tariffs targeting China (10%), Canada, and Mexico (25%) on February 3. Markets instantly recoiled, with investors fleeing risk assets like crypto for safer havens such as the U.S. dollar and bonds.

Bitcoin, which had been hovering near $100,000, tumbled to $91,530—a 7% drop—before clawing back to $97,000. Altcoins fared far worse: Ethereum plunged 16% to $2,368, while XRP and Solana cratered over 20%. The sell-off mirrored traditional markets, where tech stocks also nosedived, amplifying the panic.

The Hidden $10B Liquidation Crisis

Here’s where things get wild. Public tracking platforms like Coinglass initially reported $2.3 billion in liquidations. But Bybit CEO Ben Zhou dropped a bombshell: Bybit alone saw $2.1 billion in liquidations, yet only $333 million appeared on third-party trackers. Why?

API Limits Masked the Bloodbath

Exchanges use APIs to share data, but during extreme volatility, these systems get overwhelmed. Liquidations outpaced the feeds, leaving platforms like Coinglass blind to 84% of Bybit’s losses.

ndustry-Wide Underreporting Zhou hinted other exchanges face similar issues. If Bybit’s $2.1B represents just 25% of its true liquidations, the global total could exceed $10 billion—making this the largest crypto liquidation event ever.

Altcoin Apocalypse and Bitcoin’s Resilience

While Bitcoin stabilized relatively quickly—its market dominance surged to 61%—altcoins were decimated. XRP briefly nosedived to $1.76 (a 50% drop) after being excluded from Hong Kong’s approved crypto list, while Dogecoin and Cardano sank 9–20%. Analysts noted a flight to perceived safety: Bitcoin’s institutional adoption and liquidity shielded it from the worst of the storm.

The Rebound: Tariffs Paused, Markets Roar Back

Just as panic peaked, a lifeline emerged. On February 3, Mexico’s president announced a one-month pause on tariffs following talks with Trump. The news ignited a furious rebound:

- Bitcoin surged 6.7% to $97,000.

- XRP rocketed 50% off its lows to $2.75.

- Even meme coins like Pepe (PEPE) bounced 25%, defying the earlier carnage.

Traders pointed to bullish technical signals, like Bitcoin forming higher lows and XRP’s “hammer” candlestick pattern—a classic reversal indicator.

SO WHAT WE GET FROM THIS ?

1. Crypto’s Fragility Exposed: The API debacle revealed systemic flaws in market transparency. As Zhou vowed to “push all liquidation data” moving forward, calls for better reporting standards grew louder.


2. Geopolitics Rules: Crypto is no longer insulated from global events. Trump’s tariffs—and their abrupt pause—proved how quickly policy shifts can ignite or douse market fires.


3. Altcoin Volatility: While Bitcoin stabilized, smaller coins swung wildly. Investors learned (again) that diversification requires caution.

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