Monday witnessed a devastating cryptocurrency market selloff as more than $1.5 billion in leveraged long positions faced forced liquidation, triggering the most severe flash crash in nearly a month.
Data from Coinglass reveals that over 407,000 traders were liquidated within a 24-hour period, with bullish position closures reaching a peak of $1.5 billion. Ethereum bore the brunt of the decline, plummeting as much as 9% to $4,075, wiping out nearly $500 million in leveraged long positions. Bitcoin also suffered losses, falling approximately 3% to $111,998. Pre-market US stock index futures declined while technology stocks posted broad losses.
Market analysts attribute the sharp decline primarily to excessive leverage and overheated altcoin rallies that triggered cascading forced liquidations. Liquidation events and margin calls activated automatic sell orders, accelerating Bitcoin's descent. This chain reaction resulted in massive position closures within a short timeframe, pushing the total digital asset market capitalization below the $4 trillion threshold.
George Mandres, senior trader at XBTO Trading, commented:
"The market appears to need a breather, with some participants concerned that the 'Digital Asset Treasury trade' (DAT-trade) is losing momentum and lacks meaningful future capital inflows."
**Cascade Effect Accelerates Decline**
The weekend's initial decline escalated into comprehensive liquidations on Monday.
According to CoinGlass data, liquidation volumes reached $442 million over the past 24 hours, marking the highest level since August 29. Liquidation events peaked at $1 billion within a single hour.
After Bitcoin breached the critical $114,300 support level, it triggered massive forced closures of long positions. Within just four minutes, Bitcoin's price fell below $112,000 before staging a modest recovery to approximately $113,000.
Beyond major tokens, the liquidation event affected smaller assets worth $109.7 million. Recently strong-performing tokens including ASTER, WLFI, and PUMP also experienced significant liquidations. Even BNB, after rising from $900 to nearly $1,100, saw limited long position closures.
Historically, long positions have consistently been the primary bearers of liquidation losses. The previous major liquidation wave occurred in February 2025, when 24-hour liquidations reached $2.2 billion, affecting approximately 700,000 traders.
**Technical Indicators Signal Oversold Conditions as "Altcoin Season" Ends Abruptly**
During this selloff, Ethereum and various altcoins declined significantly more than Bitcoin. On Monday, while Bitcoin fell roughly 2.5% against the dollar, Ethereum's decline exceeded 6%. The ETH/BTC ratio suddenly dropped to 0.037, reaching a one-month low.
Ethereum's price retreated to the $4,200 range, maintaining a 26% gain from the year's beginning but representing a substantial pullback from the historical highs above $4,900 established in late August. Simultaneously, Ethereum's total open interest declined from approximately $30 billion to $27 billion, reflecting cooling derivatives market activity.
Liquidations and margin calls triggered additional automatic sell orders, accelerating Bitcoin's decline. This forced liquidation chain reaction was the primary cause of massive position closures within such a brief period.
The Relative Strength Index entered oversold territory during the sharp decline, momentarily falling below 20, highlighting the speed and severity of trader actions. Such deep oversold conditions typically accompany liquidation-driven crashes, where price movements are driven more by forced closures than organic selling.
Analysis suggests that recent weeks did not represent a true "altcoin season" but rather resembled a "brief semi-altcoin season" led by select tokens like BNB. When excessive enthusiasm for these leading tokens dissipated, it triggered a chain reaction decline across the entire market. Currently, Bitcoin's market dominance has recovered to 56.2%, while Ethereum's dominance has declined to 12.8%.
**Euphoria Cools as Market Seeks Respite**
Market analysts indicate that this large-scale liquidation was primarily triggered by rising interest rate expectations. Tightening monetary policy typically pressures alternative assets like cryptocurrencies, as rising yields on safe assets such as bonds and savings accounts reduce crypto's appeal to investors.
This flash crash is widely viewed as a correction to the market euphoria of recent weeks. In August, Bitcoin and Ethereum both reached historical highs, driven by demand from so-called "Digital Asset Treasury companies" - publicly traded companies that announced cryptocurrency as treasury reserve assets.
Market analysts note that the current correction falls within normal cryptocurrency market volatility ranges. Historically, "altcoin seasons" tend to be relatively brief, often lasting only several weeks. On a positive note, DeFi lending protocols were not threatened by large-scale liquidations, as most loan positions remained conservative with large-scale liquidation levels well below current prices.