Bitcoin's $70K Collapse Triggers $800M Liquidation Bloodbath

$800 million vanished in 24 hours. Bitcoin crashed below the critical $70,000 support level, sending shockwaves through crypto markets and triggering one of the year's most brutal liquidation events.

The Numbers Behind the Carnage

Bitcoin and Ethereum both plunged over 7%, dragging the entire crypto ecosystem into the red. The Fear and Greed Index collapsed to 11 – its lowest reading this year and firmly in "extreme fear" territory.

Leveraged positions worth more than $800 million were forcibly closed by exchanges, while total open interest shrank to $103 billion. XRP bore the brunt of the selling pressure, dropping over 10% overnight with $30 million in liquidations alone.

"Bitcoin has returned to an area that was a strong resistance from March to October 2024," noted Alex Kupsikevich, chief market analyst at FxPro. "If we look at a similar phase of the market cycle, a similarly intense sell-off in May 2022 ended with price consolidation around one level for a month, followed by a deeper dive."

When Geopolitics Meets Crypto Reality

This wasn't just another technical correction. Elevated oil volatility tied to escalating U.S.-Iran tensions created a perfect storm for risk-off sentiment. When traditional markets get jittery about inflation and geopolitical risks, higher-beta assets like crypto get hammered first and hardest.

The derivatives market painted a picture of peak fear. Short-term bitcoin and ethereum puts traded at premiums exceeding 10 points over calls on Deribit, while bearish put spreads dominated large block trades. Yet 90-day futures still maintain a premium to spot prices – a sign that true capitulation hasn't arrived yet.

Interestingly, some tokens bucked the trend. Open interest actually increased for XAUT, LINK, TRX, and PEPE, while derivatives exchange token MYX gained 4%, extending its year-to-date rally to 56%.

The Liquidation Cascade Effect

What started as selling pressure quickly snowballed into forced liquidations. As leveraged long positions hit margin calls, automatic sell orders flooded the market, creating a feedback loop that accelerated the decline. This is crypto's version of a bank run – but happening in real-time across global exchanges.

Privacy coins Monero and Zcash each dropped 7%, reflecting broader regulatory concerns that continue to weigh on the sector. Meanwhile, the bitcoin-heavy CoinDesk 20 Index fell 8.34%, underperforming the altcoin-dominant CoinDesk 80 Index, which dropped 5.92%.

Several altcoins now show the telltale signs of a deep downtrend – a series of lower lows and lower highs not seen since the 2022 bear market. The question isn't whether more pain is coming, but how much.