- Crypto markets lost roughly $150 billion in value over the past 24 hours today.
- $450 million in leveraged long positions were liquidated during the sell-off.
- Iran’s UN speech and a rejected Hormuz deal triggered the initial sell-off.
Crypto markets lost roughly $150 billion in value over 24 hours, with $450 million in leveraged long positions wiped out as prices tumbled.
Bitcoin dropped 3.6% to $84,151, XRP declined 8.2% to $1.51, and Ethereum slipped 3.4% to $2,687, although most major assets are still up on a weekly basis.
What Set Off The Selling
The drop followed a tense session at the United Nations, where Iranian President Masoud Pezeshkian said Iran would “never bow our head or bend at the knee.” The US delegation reportedly walked out after he accused Washington of violence against civilians.
That came shortly after reports that the US had rejected an Iranian proposal to reopen the Strait of Hormuz. Tehran had reportedly demanded an end to the US naval blockade and the release of frozen Iranian assets.
Traders quickly began pricing in a longer US-Iran standoff, a scenario that could keep oil prices elevated and add to inflation pressure. Nearly $1 trillion was wiped from stocks, metals and crypto combined within the hour following the speech.
Bond markets also reacted, with the 10-year Treasury yield jumping 15 to 17 basis points to 5.12%.
How Leverage Turned A Drop Into A Crash
Once prices started falling, leveraged long positions across exchanges and lending protocols began hitting their liquidation thresholds. Here’s how that plays out:
- Automated bots seize a borrower’s collateral once a loan becomes undercollateralized
- The bots immediately sell that collateral to lock in the recovered funds
- Enough of these sales at once overwhelm available buyers, pushing prices down further
- That lower price feeds back into the system through price oracles
- Other loans then drop below their own liquidation thresholds, triggering another round of forced selling
Why This Creates A Cascade Rather Than A Simple Dip
This feedback loop is what separates a liquidation cascade from ordinary selling. Ordinary sellers stop once they’ve sold what they intended to sell.
Liquidations don’t work that way. Each forced sale can create the exact price move needed to trigger the next one, so the decline can accelerate well beyond what the original news would justify on its own.
The cascade only slows once liquidity thins enough that no over-leveraged positions remain to close, or once buyers step back in to absorb the selling.
What This Says About The Move
The scale of the liquidations relative to the drop suggests forced selling, not just organic selling pressure, did much of the work in deepening today’s crash. A geopolitical shock and a bond market jolt turned into an outsized move across crypto.
Related: How Will the Upcoming BTC and ETH Options Expiry Affect the Price?
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