ETH Prices Plunge 10% as Trader Loses $220 Million in Forced Liquidation

TLDR

• More than $2.5 billion in crypto positions were liquidated in 24 hours.
• ETH led the liquidations with over $1.15 billion in wiped-out positions.
• Over 434,000 traders lost positions, with long bets accounting for most of the damage.
• Liquidations intensified due to thin market liquidity and high leverage.

The cryptocurrency market experienced a significant downturn on February 1, 2026, with over $2.5 billion in liquidations across various exchanges. A notable incident involved a trader losing over $220 million on a leveraged Ethereum (ETH) position, as the price of ETH fell by up to 10%. This forced liquidation on the Hyperliquid exchange was one of the largest in recent history.

The liquidation occurred during a sharp 17% decline in ETH’s price, alongside other major cryptocurrencies like Bitcoin and Solana. The massive sell-off underscored the risks of leveraged trading in volatile market conditions, where small price movements can result in substantial losses.

The Role of Liquidations in Market Dynamics

Liquidations occur when the value of a trader’s position falls below a certain threshold, prompting the exchange to automatically close the position. In the case of leveraged trading, this process can lead to significant losses, as traders borrow funds to amplify their positions. When the price of the asset moves against them, the exchange will sell off their holdings to cover the borrowed amount.

In the 24 hours preceding February 1, liquidations were widespread across multiple exchanges. A total of 434,945 traders were affected, with the majority of the losses coming from long positions. Specifically, over $2.42 billion of the $2.58 billion total came from traders who had bet on rising prices. The heavy concentration of long positions in liquidation events can sometimes signal market panic, often followed by price reversals.

Ether’s Leading Role in the Sell-Off

Ether, which experienced the largest price drop among major cryptocurrencies, saw over $1.15 billion worth of positions liquidated. ETH’s decline was particularly significant, as it led the broader market downturn, which affected Bitcoin and Solana as well.

In total, more than $788 million worth of Bitcoin positions were liquidated, followed by nearly $200 million in Solana positions. The Ethereum market’s large-scale liquidation events occurred amid low liquidity, making it more susceptible to sharp price fluctuations. A lack of liquidity can cause prices to move more abruptly, triggering a chain reaction of forced liquidations.

Hyperliquid Exchange Bears the Brunt of the Losses

The Hyperliquid exchange, known for its decentralized derivatives trading, was particularly hard-hit by this wave of liquidations. It recorded over $1.09 billion in total liquidations, with nearly all of it coming from long positions. This accounted for more than 40% of the total losses across exchanges in the 24-hour period.

Following Hyperliquid, Bybit and Binance also reported significant liquidations, with Bybit seeing $574.8 million and Binance around $258 million. The severity of these liquidations reflects the increasing role of leverage in the crypto market and its impact on volatility during sudden price moves.

Impact of Market Liquidity on Forced Liquidations

The current wave of liquidations highlights the effect of market liquidity on price stability. In markets where liquidity is low, even a small price movement can result in a large cascade of forced liquidations. This is exacerbated by the use of leverage, which increases the risk of significant losses when market conditions change rapidly.

As seen in the aftermath of ETH’s 17% drop, the resulting cascade of liquidations can sometimes signal the end of a price downtrend, leading to a potential market reversal. Traders and investors use liquidation data to gauge market sentiment and to predict potential turning points in price movements.

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