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Bitcoin crashed to $81,300 on Thursday, its lowest level in six weeks, triggering $1.7 billion in forced liquidations across 273,000 trader positions as fears of U.S.-Iran conflict and Federal Reserve uncertainty roiled crypto markets.
The selloff, which erased an estimated $1.7 billion in a single day, was driven by mounting fears of U.S.-Iran conflict and renewed uncertainty over the future direction of U.S. monetary policy.
The latest Crypto market liquidation accelerated in the final hours of trading as Bitcoin slid below key technical levels, intensifying forced sell-offs across major exchanges. CoinGlass reported that 273,244 traders were liquidated within 24 hours, underscoring the scale of leverage embedded in the market.
The single largest liquidation order was recorded on HTX, where a BTC-USDT position worth $81 million was wiped out, marking one of the biggest forced closures of the year. Analysts tracking derivatives flows noted that the decline pushed Bitcoin to its weakest level in over six weeks, amplifying volatility across altcoins and related crypto assets.
Market participants pointed to a combination of macroeconomic stressors and geopolitical anxiety as immediate catalysts. Concerns over a possible U.S. military action against Iran intensified risk aversion, sending traders rushing to unwind positions and contributing to the broader Crypto market liquidation trend.
Beyond geopolitics, Washington policy developments played a central role in fueling the Crypto market liquidation. The correction coincided with President Donald Trump’s announcement that he would soon select a nominee for the next Federal Reserve chairman, a decision closely watched by both traditional and digital asset investors.
Trump is expected to nominate Kevin Warsh, a Stanford University professor and former Federal Reserve governor who served from 2006 to 2011. Warsh has been a vocal critic of recent Federal Reserve policies and supports Trump’s preference for significantly lower interest rates.
According to people familiar with the selection process, Warsh emerged as the “front-runner” after a shortlist review that included National Economic Council Director Kevin Hassett, current Fed Governor Christopher Waller, and BlackRock executive Rick Rieder. The prospect of a policy shift at the Fed added to existing uncertainty, reinforcing downside pressure during the ongoing Crypto market liquidation.
Trump has repeatedly criticized current Fed Chair Jerome Powell for not cutting rates aggressively enough, and traders interpreted the nomination signals as another source of near-term instability for risk assets, including cryptocurrencies.
Geopolitical tensions in the Middle East further intensified the Crypto market liquidation, as investors reacted to signs of escalating conflict. The U.S. president recently deployed the Abraham Lincoln Carrier Strike Group to the region, warning that Iran’s opportunity to reach an agreement was “running out” — Donald J. Trump, President of the United States.
This backdrop of rising geopolitical risk spilled into broader financial markets. U.S. crude oil prices surged more than 2.5%, while Brent crude climbed 2.3% to nearly $70 per barrel. In contrast, gold retreated sharply from its recent all-time high above $5,500 per ounce to around $5,100 in a single day, signaling shifting investor sentiment.
In crypto derivatives markets, CoinGlass data showed that the maximum pain point for Bitcoin options sits near $90,000, well above current spot prices. With approximately 91,000 Bitcoin options contracts set to expire on Friday in January, many traders face losses if prices remain depressed, adding fuel to the ongoing Crypto market liquidation.
Derivatives data suggests that the Crypto market liquidation may not be over. The put/call ratio for the week’s Bitcoin options expiry stands at 0.54, indicating a higher number of call options than puts but reflecting increased demand for downside protection.
Open interest in Bitcoin options remains elevated, with roughly $1.9 billion concentrated at the $100,000 strike price on Deribit. Meanwhile, more than $1 billion in open interest is spread across bearish levels at $75,000, $80,000, and $85,000, highlighting growing expectations of further declines.
Since the start of the year, total Bitcoin options open interest across exchanges has climbed to $58 billion, even as the broader crypto market has lost an estimated $250 billion. The Federal Reserve’s decision to keep U.S. interest rates steady between 3.5% and 3.75% still above its 2% inflation target has continued to weigh on speculative assets, reinforcing the Crypto market liquidation narrative.
Market data also shows that both futures and spot cumulative volume delta have declined sharply, indicating sustained selling pressure from spot and perpetual futures traders alike. As February approaches, many investors are bracing for continued volatility and a potentially challenging start to the new month amid persistent Crypto market liquidation risks.
