Many people were stunned by the flash crash in the crypto market yesterday.
In the afternoon it was still partying while nearing 80,000, but by night it suddenly plunged sharply.
Let’s review the situation:
· Bitcoin consecutively broke through the 78,000 and 77,000 levels, briefly falling below 77,000 USD
· Ethereum lost the 2,400 USD level
· Solana dropped by about 11.5% during intraday trading
· XRP was the worst-hit, falling 37% within a few minutes, down around 0.6 USD
Even the liquidation data was more surprising:
· At the most extreme intraday point within 1 hour, total liquidations across the entire network reached 523 million USD, with liquidated long positions totaling 448 million USD
· In 24 hours, 286,130 people were affected by forced liquidations, while total liquidations across the entire network exceeded 1.801 billion USD
· The single largest forced liquidation occurred on BTC-USD on Hyperliquid, worth 24.96 million USD
· XRP saw massive liquidations—about 500 million USD in long positions liquidated within a few minutes
Why did it suddenly collapse?
After summarizing various information, the cause is actually very clear—it’s not a black swan, but leverage collapsing on its own.
First reason: the previous short squeeze was too aggressive; long-position leverage piled up like a barrel of gunpowder
From August 19 to 21, the market had just gone through a short squeeze with a notional value of nearly 3 billion USD.
Bitcoin rose from 64,000 USD to break through 77,000 USD, up 20% in three days.
Brutal upward moves attract many price-chasing funds, and those funds use high leverage—the most common behavior of retail investors.
Second reason: long positions at high levels had a domino effect; liquidations triggered liquidations
When the market touched technical resistance and started to experience an initial correction, long positions piled up at high levels quickly fell below the maintenance margin.
This triggered automatic position closures. .
In the afternoon it was still partying while nearing 80,000, but by night it suddenly plunged sharply.
Let’s review the situation:
· Bitcoin consecutively broke through the 78,000 and 77,000 levels, briefly falling below 77,000 USD
· Ethereum lost the 2,400 USD level
· Solana dropped by about 11.5% during intraday trading
· XRP was the worst-hit, falling 37% within a few minutes, down around 0.6 USD
Even the liquidation data was more surprising:
· At the most extreme intraday point within 1 hour, total liquidations across the entire network reached 523 million USD, with liquidated long positions totaling 448 million USD
· In 24 hours, 286,130 people were affected by forced liquidations, while total liquidations across the entire network exceeded 1.801 billion USD
· The single largest forced liquidation occurred on BTC-USD on Hyperliquid, worth 24.96 million USD
· XRP saw massive liquidations—about 500 million USD in long positions liquidated within a few minutes
Why did it suddenly collapse?
After summarizing various information, the cause is actually very clear—it’s not a black swan, but leverage collapsing on its own.
First reason: the previous short squeeze was too aggressive; long-position leverage piled up like a barrel of gunpowder
From August 19 to 21, the market had just gone through a short squeeze with a notional value of nearly 3 billion USD.
Bitcoin rose from 64,000 USD to break through 77,000 USD, up 20% in three days.
Brutal upward moves attract many price-chasing funds, and those funds use high leverage—the most common behavior of retail investors.
Second reason: long positions at high levels had a domino effect; liquidations triggered liquidations
When the market touched technical resistance and started to experience an initial correction, long positions piled up at high levels quickly fell below the maintenance margin.
This triggered automatic position closures. .