Bitcoin experienced a dramatic drop below $90,000 on January 20, 2026, leading to a staggering $1.09 billion in forced liquidations across the cryptocurrency markets. The sudden price shift left many traders unprepared, as most had positioned themselves for a continued price rally.
Data from CoinGlass indicates that 183,066 traders were affected within a single day, with long positions constituting a massive 92% of total liquidations, amounting to $1.08 billion. In stark contrast, only $79.67 million in short positions were liquidated. This significant disparity underscores just how heavily traders had invested in the belief that prices would keep rising.
As trading plunged, Bitcoin hit lows of $87,800 during late U.S. hours, only to recover slightly to above $89,000 as Asian markets opened. This 3% decline marked an abrupt change from the previous week, where Bitcoin had been trading near recent highs.
Understanding Liquidations
Liquidations occur when exchanges close a trader’s leveraged position due to insufficient funds, automatically selling off collateral to cover losses. This creates a cascading effect where each liquidation reduces prices further, triggering additional margin calls.
Bitcoin and Ethereum Lead Liquidation Statistics
During the selloff, Bitcoin recorded approximately $427 million in liquidated long positions, while Ethereum faced about $374 million in forced liquidations. Together, these two cryptocurrencies dominated the liquidation landscape.
The largest individual liquidation was a compelling $13.52 million BTCUSDT order on Bitget. Major exchanges reported significant losses, with Hyperliquid tracking $132.39 million in liquidations, Bybit $91.35 million, and Binance $64.08 million across a four-hour window.
Notably, several high-profile traders suffered during the downturn. A well-known investor, often referred to as Machi Big Brother, encountered five liquidations in a single day, totaling losses of $24.18 million.
Market momentum indicators also reveal ongoing stress beyond mere price decline. Most altcoins displayed a daily Relative Strength Index (RSI) below 50, reinforcing the bearish sentiment among traders.
External Factors Fueling Crypto Volatility
This mass liquidation coincided with broader market jitters. President Donald Trump renewed tariff threats against European nations regarding his Greenland proposal, leading to increased caution among investors.
Compounding the situation, Japanese government bonds experienced a sharp sell-off on the same day, with the yield on 30-year bonds spiking 25 basis points to 3.86%. The 10-year yield also rose, reaching 2.34%, marking unprecedented levels.
Japanese government bond demand is crashing:
Japanese insurers sold -$5.2 billion of bonds with maturities of 10+ years in December, the largest monthly sale since data began in 2004.
This marks the 5th consecutive monthly sale, the longest streak on record.
Over this period,… pic.twitter.com/B87xlfW8vm
— The Kobeissi Letter (@KobeissiLetter) January 21, 2026
Rising Japanese yields pose a threat to global markets, as historically low rates have supported the carry trade that allows investors to borrow yen at cheap rates for higher-yielding investments, including cryptocurrencies. Should yields continue to rise, maintaining these leveraged positions becomes increasingly expensive, prompting a retreat to the safety of Japanese bonds.
The ongoing World Economic Forum in Davos has further added to market uncertainty. Discussions concerning policy implications often lead to notable volatility, especially in the cryptocurrency sector currently grappling with heightened regulatory scrutiny globally.
The ratio of liquidations to open interest remains elevated across crypto markets, highlighting widespread deleveraging due to forced selling. This metric gauges the share of open positions that have been liquidated, typically spiking during turbulent market periods. These repeated liquidations deplete investor capital, making it increasingly challenging for them to re-enter the markets at lower prices.
As the market digests these recent events, traders and investors alike will be keen to understand the implications for the future trajectory of cryptocurrencies, watching for signs of recovery amid the current tumult.
