Ether bears the brunt as $1.19 billion in leveraged bets goes up in smoke
Ether traders absorbed a disproportionate share of the damage in the crypto market’s latest leveraged flush, with roughly $356 million in ETH positions liquidated over 24 hours, according to data compiled by CoinDesk. That figure exceeded bitcoin’s $298 million in liquidations despite ether’s market value standing at less than one-fifth of bitcoin’s.
Measured against market capitalisation, ether took approximately six times the punishment. Ether liquidations worked out to roughly $1.2 million for every $1 billion of market value, compared with about $180,000 per $1 billion for bitcoin. Ether fell more than 3% to around $2,490 during the slide, while bitcoin lost about 1%.
The wider picture was ugly. Across the market, $1.19 billion in positions was liquidated over 24 hours, and more than $1 billion of that came from longs, traders betting on higher prices. SOL bets accounted for another $71 million, XRP for $34 million and NEAR for $25 million, with every other token combined adding roughly $119 million. The largest single wipeout was a nearly $20 million ether position on Hyperliquid, the decentralised exchange for leveraged trading.
The episode is a textbook illustration of how liquidation cascades work. A liquidation happens when a trader borrows to make a bigger bet and losses eat through the collateral they posted, forcing the exchange to close the position automatically. That often means selling into an already falling market, pushing prices lower for the next trader in line. When leverage is stacked across thousands of positions, one range break can trigger a chain reaction that feeds on itself.
For ongoing coverage of the market’s leveraged excesses, see our Bitcoin coverage.
What triggered the slide
The selling began late Thursday as a confluence of macro and geopolitical pressures converged on leveraged crypto markets. Bitcoin slid from about $83,200 to as low as roughly $80,400 after minutes from the Federal Reserve showed most officials expected another rate hike before year-end. A report that the Pentagon was preparing for renewed combat in Iran pushed oil prices higher, compounding the risk-off tone.
Crypto-specific anxieties added fuel. Ethereum researcher Justin Drake’s warning that artificial intelligence could break the mathematics securing crypto wallets sooner than expected rattled sentiment, prompting calls for holders to enter what some described as “bunker mode” against possible AI attacks. The warning landed on a market already stretched thin by a week of leverage accumulation.
Traders had been piling on leverage throughout the week as bitcoin bounced between $83,000 and $87,000. That range left plenty of positions primed to be knocked over once it broke. When it did, the cascade was swift and indiscriminate, though ether’s outsized losses suggest its leveraged long base was particularly concentrated.
The rate-hawkish Fed minutes matter for crypto beyond the immediate price action. Higher rates compress the appeal of non-yielding and speculative assets, and leveraged crypto traders are among the first to feel that shift through tighter funding conditions and thinner risk appetite. Thursday’s flush shows how quickly positioning built on a stable rate outlook can unravel when that assumption is challenged.
Shorts squeezed as Trump rules out Iran strike
The market’s direction reversed almost as quickly as it fell. Bitcoin recovered to about $82,200 after President Trump said the United States would not strike Iran before the midterm elections, a geopolitical de-escalation that caught bearish traders off guard.
The bounce triggered roughly $25 million in liquidations over four hours, and about 78% of that came from traders betting on further declines. In the past hour alone, shorts made up nearly $12 million of about $13 million liquidated. The squeeze is a reminder that volatility cuts both ways, and that traders who position for continuation after a sharp move can be just as exposed as those caught holding longs into the slide.
Bitcoin now sits about $800 below $83,000, the level where Thursday’s selling began. That leaves the market in a delicate spot: the range that trapped leveraged longs has not been reclaimed, but the rebound has punished those who pressed the short side too aggressively.
The timing adds a layer of historical resonance. The squeeze comes a day before the anniversary of October 10, 2025, when a record $19 billion was liquidated in a single day, roughly 16 times Thursday’s total. By that standard, this week’s flush was a routine clearing event rather than a systemic shock, though the concentration in ether warrants attention.
Why ether took six times the damage
Ether’s disproportionate losses raise questions about the composition of leveraged positioning in the ETH market. With ether’s market value less than one-fifth of bitcoin’s, the near-parity in absolute liquidation figures points to a leveraged base that was far more crowded relative to the asset’s size. Ether has increasingly become the preferred vehicle for directional leveraged bets on decentralised trading venues, where Hyperliquid hosted the single largest wipeout of the session.
The mechanics of liquidation amplify this dynamic. Because forced closures sell into falling markets, assets with thinner liquidity and more concentrated leverage experience steeper drawdowns per dollar liquidated. Ether’s 3% decline against bitcoin’s 1% loss on the day reflects that asymmetry. When the same dollar volume of forced selling hits a smaller market, the price impact is necessarily greater, which in turn triggers further liquidations at lower levels.
The AI security angle may also weigh more heavily on ether specifically. Drake’s warning concerns the cryptographic assumptions underpinning crypto wallets, and the subsequent calls for “bunker mode” among bitcoin and ether holders speak to a broader anxiety about the long-term integrity of wallet security in an era of advancing AI capabilities. Zcash developers have since set a January target for quantum-resistant payments, a signal that the industry is treating the threat as credible enough to act on.
For ether traders, the lesson is familiar but repeatedly relearned: leverage magnifies both directions, and liquidation risk is not distributed evenly across the market. An asset can be structurally sound while its leveraged derivatives market is fragile.
The road ahead for leveraged markets
Thursday’s $1.19 billion flush, while painful for those caught in it, fits a pattern of periodic leverage resets that have become a feature of crypto market structure. The market’s ability to absorb the selling and rebound to within $800 of the level where the decline began suggests the underlying bid remains intact. Trump’s pledge on Iran provided the immediate catalyst for the recovery, but the Fed’s rate path remains the dominant macro variable.
The concentration of losses in ether, however, is a data point worth monitoring. If leveraged ETH positioning continues to run at multiples of bitcoin’s relative to market size, ether will remain the more volatile leg of the market during stress events, with liquidation cascades hitting ETH holders harder and faster. That has implications for traders choosing between the two assets for directional exposure, and for the venues that host this activity.
The anniversary of the record $19 billion liquidation day serves as a benchmark. Thursday’s event was a fraction of that scale, but the mechanics that produced both are identical: leverage accumulated in a range, a catalyst broke the range, and forced selling did the rest. As long as leveraged crypto trading grows, these flushes will recur. The question for participants is not whether they will happen, but whether positioning will be sized to survive them.
For now, bitcoin steadies near $82,500 and shorts are paying for the bounce. Whether the market can reclaim $83,000, and whether ether can stabilise around $2,500, will depend less on the next headline and more on how quickly leveraged traders rebuild the positions that were just wiped out.
