🐳 Weekly Edition: Crypto Market Experiences Largest Liquidation Event in History

Just as the stock market was closing this afternoon, heading into the most illiquid hours for crypto, Trump announced there would be 100% tariffs placed on China; the ensuing liquidation cascade is the largest I’ve seen in my 6 years in the industry. After starting the day at over $120k, Bitcoin fell as low as $100k on several exchanges. We’ve seen 20% candles on BTC before, but we haven’t seen 20% candles on BTC when it’s worth over $2T before. If that sounds crazy, wait until you see the charts on some of the altcoins: Plume went from $0.09 to $0.009 on Binance in about 10 minutes, and Cosmos went from $4 to $0.002 in 15 minutes. These two aren’t alone by any means, as most altcoins made a similar move. Liquidation data from exchanges is notoriously underreported (Binance only reports one liquidation per second), but the latest estimates point to over $20B in liquidated positions, the largest in crypto history.

Basically, if you were long on any altcoin, you were likely liquidated today. Given the breadth of assets, total dollar amount and speed at which it happened, it’s likely one of the bigger players in our industry got taken out behind the shed today. There are loads of rumors flying around yet nothing credible so far, but if I had to guess I would say only market makers or exchanges fit the bill here. Market makers are almost running “delta neutral” trading operations, however when order books get hit this hard this quickly it is nearly impossible to maintain that status. We won’t really know how TradFi reacts to the tariff news until Monday given the timing of the announcement, so despite lots of good coins being on discount right now, it could be prudent to wait and see where it all goes. On one hand, clearing up (all) of the leverage on the long side is likely a good thing in the long term, but on the other hand this much blood will have everyone scared in the short term.

It is days like today that make me glad I’m not a leverage trader, as despite my own portfolio as well as the Beluga Trading Wallet falling significantly, it’s not at $0. Our balance now stands at about $120k, still representing a net gain since we seeded the wallet with $100k. I certainly wish we had some more dry powder on the side to look for entries after this bloodbath, but it is what it is. Until we see how other markets react to the news on Monday (and hopefully learn which entity or entities blew up today), I plan to sit on my hands and do nothing. If you happened to miss the events today, take a look at the 24HR change of our coins in the screenshot below, and remember that these numbers have come AFTER they bounced from the lows of earlier today.

If you are someone who was liquidated today, remember that there are lots of traders out there in the same position as you. Money is a number at the end of the day and it can always be made back. Use this as a learning moment, however painful it may be, to improve your strategies and risk management going forward. There will be more opportunities just as there always are, and we need to be ready to capitalize on them. In the meantime, touch some grass this weekend, spend time with family and friends, and try to stay away from the charts.

Rough day

On second thought, maybe we should have a Plan B?