The cryptocurrency market was hit by a violent shock that wiped out $1.08 billion in a single day and forced more than 182,000 traders to close their positions. The event occurred on January 20, 2026, with nearly all losses falling on traders who were positioned for further price increases in Bitcoin and Ethereum.

The market sent a clear message: leveraged trading has become extremely dangerous in an environment of tightening global liquidity.

Liquidation Cascade Crushes Long Positions

Within 24 hours leading up to January 20, 2,729 individual positions were liquidated. Long traders absorbed almost the entire damage—$1.08 billion, while short positions accounted for just $79.67 million, highlighting how one-sided market positioning had become.

Bitcoin and Ethereum dominated liquidation volumes:

  • Bitcoin (BTC): $427.06 million

  • Ethereum (ETH): $374.47 million

The largest single liquidation occurred on the BTCUSDT_UMCBL pair on Bitget, totaling $13.52 million.

Major platforms were heavily affected:

  • Hyperliquid – $132.39 million in just 4 hours

  • Bybit – $91.35 million

  • Binance – $64.08 million

As prices moved sharply against leveraged positions, exchanges triggered automatic margin calls, creating a chain reaction of forced selling that accelerated the downturn.

One Trader “Rekt” Five Times in a Single Day

Notable trader Machi Big Brother was liquidated five times in one day, losing $24.18 million. He still holds 2,200 ETH worth $6.67 million, but those holdings are at risk if Ethereum drops to $2,991.43.

Warning signs were already present. Most altcoins are now trading with daily RSI levels below 50, a threshold that typically signals continued selling pressure.

The ratio of liquidations to open interest remained elevated across the market—a metric that tracks how much of active positions are being forcibly closed by exchanges, which tends to spike during stress events.

The result is a depleted market: trading accounts wiped out, capital exhausted, and buyers arriving too late—when the market needs them most.

Japan Tightens the Global Liquidity Noose

Conditions worsened further due to developments outside crypto. On January 20, Japan’s bond market experienced a major shift:

  • The 30-year Japanese government bond yield jumped 25 basis points to 3.86%

  • The 10-year yield rose 8 basis points to 2.34%

Both levels represent modern-era record highs.

For years, ultra-low Japanese yields fueled global carry trades—borrowing yen cheaply to invest in higher-yielding assets such as cryptocurrencies. As yields rise, these trades become more expensive, prompting capital to flow back into Japan.

The Bank of Japan now faces a dilemma:

  • tightening policy risks market instability,

  • capping yields risks weakening the yen.

Either way, the era of easy global liquidity is fading.

Davos Uncertainty and the Risk of Another Sell-Off

Another layer of uncertainty comes from the World Economic Forum in Davos, where ongoing political discussions could lead to tighter regulatory measures. Combined with weakening technical indicators, shrinking liquidity, and depleted trading capital, the risk of renewed volatility is rising.

Once again, crypto markets are reminded of a hard truth: leverage amplifies gains—but in moments of stress, it takes everything. When conditions flip, exchanges liquidate without mercy, leaving traders completely “rekt.”

What Comes Next?

Until global financial conditions improve and new liquidity enters the system, downside pressure may persist. Only lower price levels or a meaningful shift in macroeconomic trends are likely to attract fresh capital.

The coming days will reveal whether crypto markets can absorb this liquidation shock—or whether another wave of forced sell-offs lies ahead.


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