In a single hour today, more than $560 million in crypto positions was liquidated — $530 million of it long positions betting prices would rise. That is not a normal red day. That is a liquidation cascade, and here is how it works.
What is a liquidation cascade?
When traders open leveraged long positions, they borrow money to bet on higher prices. If the price falls too far, the exchange closes their position automatically. Each forced sale pushes the price lower, which triggers the next set of liquidations. One sale causes the next — that chain reaction is the cascade.
What happened on 5 November:
• $ETH opened at $2,442.54 and fell to $2,258.46 — down 7.54% on the day (Finnhub, 16:14 UTC). Its day range was $2,236.78 to $2,445.63.
• $BTC fell from $80,638 to $76,098, down 5.63%, with a day low of $75,568 (Finnhub).
• $SOL fell about 6% over 24 hours as the whole market dropped together.
• Total crypto market cap fell 4.97% to $2.62 trillion — about $137 billion wiped out in 24 hours (CoinGecko, via LoopWire).
• CoinGlass data showed more than $560 million liquidated in one hour, $530 million of it longs (via CryptoPotato). Over 24 hours, $679 million was liquidated — 77.5% of it longs — across 130,290 traders (CoinGlass, via KuCoin, 15:35 UTC).
• It was not crypto-only: the S&P 500 erased about $2.2 trillion in market value in around 40 minutes (Kobeissi Letter, via CryptoPotato). The reported trigger was surprisingly strong US jobs data — initial jobless claims fell to 189,000, a 57-year low.
Two ways this could go — as possibilities, not predictions:
• If the day's lows hold — ETH near $2,237 and BTC near $75,568 — the forced selling may pause and the market can stabilise.
• If those lows break, more leveraged positions sit below them, and the cascade could extend before buyers step back in.
The mirror image happened yesterday. On 4 November, about $450 million in short positions was liquidated as Bitcoin ran to $81,000 (CoinDesk). Leverage cuts both ways: the same mechanism squeezes shorts up and longs down.
The takeaway: today's drop was not one coin's story. A macro shock met a leveraged market, and forced selling did the rest.
Do you watch liquidation data before judging a big red day — or do you only look at the price?
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Not financial advice.