On January 20, 2026, there was a significant event in the crypto market where many traders lost their positions. More than 182,000 traders had to forcibly close their positions. A total of over $1.08 billion was liquidated. Almost all losses came from long positions, as Bitcoin and Ethereum traders faced a chain of margin calls.
Traders are now experiencing more risk due to higher leverage. At the same time, there are increasingly economic problems and weaknesses in digital assets worldwide.
Record liquidations hit leveraged traders hard
According to CoinGlass data, 182,729 traders were liquidated in the 24 hours leading up to January 20. They lost a total of 1.08 billion USD. This primarily affected long positions amounting to 1.08 billion USD. In contrast, short liquidations amounted to 79.67 million USD.
In Bitcoin, there were 427.06 million USD in liquidated longs, and in Ethereum, it was 374.47 million USD. The largest liquidation on Bitget involved a BTCUSDT_UMCBL position worth 13.52 million USD. Major exchanges showed significant losses: Hyperliquid lost 132.39 million USD through long liquidations. Bybit lost 91.35 million USD and Binance 64.08 million USD – all within four hours.
A liquidation occurs when an exchange closes a leveraged position because the deposited funds are no longer sufficient to cover losses. If prices move against very high leverage, the exchange automatically sells collateral. This often creates a chain reaction: each new liquidation pushes the price further down and triggers new margin calls.
Many well-known traders have been hit hard. Machi Big Brother, a well-known investor, was liquidated five times in one day. He lost a total of 24.18 million USD. His remaining 2,200 ETH, currently worth 6.67 million USD, would also be at risk if Ethereum falls to 2,991.43 USD.
Technical weakness and warning signals for stress in the crypto market
In addition to falling prices, there were also other clear signs of stress in the crypto market. Technical analyses show: Most altcoins are trading with the daily Relative Strength Index (RSI) below 50. This indicates persistent selling pressure. The RSI ranges from 0 to 100; values below 50 indicate negative sentiment.
The liquidation-to-open-interest ratio remained high in the last 24 hours. This shows that many positions were dissolved. This ratio often increases significantly during stress and forced sales.
"Most altcoins are traded with a daily RSI below 50. This shows selling pressure. Additionally, the 24h liquidation/open interest ratio is at a high value. This means many traders were liquidated in the last 24 hours. It is a typical situation with high stress in the market."
These many liquidations have significantly reduced investor capital. This makes it harder for traders to buy again at lower prices. It can cause a downward spiral, as there are fewer and fewer buyers, even though demand is needed right now to stabilize prices.
Global liquidity risks are putting pressure on markets
In addition to the difficulties in the crypto market itself, global economic developments also exacerbate the fluctuations. The Japanese bond market changed significantly on January 20: The yield on 30-year government bonds rose by 25 basis points to 3.86 percent, while the 10-year bonds increased by 8 basis points to 2.34 percent. Both values are records for Japanese government bonds.
This change has significant consequences. For decades, low Japanese yields provided a lot of liquidity worldwide. Many investors used the so-called carry trade: they borrowed yen at low interest rates and invested that money in higher-yielding assets, including crypto.
However, rising Japanese interest rates make such transactions more expensive. As a result, capital flows back to Japan and is withdrawn from riskier investments like crypto. The Bank of Japan faces a difficult situation: either yields are controlled, which could weaken the yen, or a tighter monetary policy could lead to market problems or loss of confidence. In any case, liquidity in the global market will decrease.
Additionally, there is further pressure from the World Economic Forum in Davos. There, rules are being discussed. This often brings even more uncertainty to financial markets. Especially crypto is under observation by authorities around the world.
Crypto markets: Continued fluctuations expected
Technical weakness, lack of capital due to loss-making traders, and reduced global liquidity continue to create uncertainty. In the short term, fluctuations could increase as the markets digest the higher Japanese interest rates and signals from Davos.
Highly leveraged traders remain at risk. If things go worse, positions are automatically liquidated by exchanges to limit risks. Often, traders are then 'rekt', which means in German: broken or completely bankrupt.
Good risk management is very important when many liquidations occur and stress levels are high. However, these poor conditions and the lack of capital prevent new purchases as long as low prices do not attract new investors or global trends improve.
Whether the crypto market can withstand this phase or if further liquidation waves will come will be revealed in the coming days as global financial conditions continue to change.
