Crypto Market Hit Hard in 2025 Liquidation Wave, but Is a Rebound Underway?

The first six months of 2025 delivered a heavy blow to the crypto market, with an intense round of long position liquidations dominating activity. Traders who had been betting on rising prices faced a severe reckoning as market sentiment reversed sharply. The result was a wave of automated position closures across trading platforms as prices declined. But after months of pain, is a rebound finally on the way?

Over $1.8B in Longs Liquidated After Sudden Market Shock

This downturn was most visible in early February, particularly on the 3rd, when roughly $2.23 billion worth of leveraged crypto positions were forcibly closed. Long trades accounted for a large part of that figure, with around $1.88 billion cleared out. The data, reported by crypto analytics firm CoinGlass, showed that over 729,000 traders were impacted in a single day—an indication of just how widespread the event was.

The volatility didn’t emerge out of nowhere. That day’s price shock was closely tied to an unexpected announcement from U.S. President Donald Trump. The decision to impose a new set of trade tariffs sent waves through financial markets and triggered a rush for safety. For the crypto sector, that meant mass selling and the sudden unwinding of risky positions.

Triple Blow Hits Markets, Fueling Crypto’s February Slide

Other news that worsened the event came crashing in on February 25, 2025, adding fuel to an already burning market. What began as a nervous environment quickly turned into a cascade of panic selling and forced liquidations.

Here’s what piled on the pressure and intensified the crypto market meltdown:

• On Feb. 25, Trump confirmed his administration would proceed with planned trade tariffs, shaking investor confidence.
• Walmart issued a profit warning, adding to the negative news weighing heavily on market sentiment.
• Federal Reserve’s meeting minutes revealed a more aggressive tone regarding future policy, further weighing on investor mood.
• This event led to about $1.57B in liquidations, according to CoinGlass, with long positions absorbing most of the damage.
• Bybit also recorded $666M in positions wiped out that day—nearly 90% of them were long trades caught off guard.

Although Bitcoin and Ethereum were affected, the drop was even steeper across the broader altcoin market. Solana surged to a high point in mid-January, gaining strong traction from investors. But that rally quickly faded. By the end of February, the token had plunged by more than 50%, wiping out much of those earlier gains. The steep drop triggered over $150 million in liquidations tied to its perpetual futures contracts.

The sell-off continued through early March, with prices sinking across the board. Bitcoin briefly dropped as low as $82,000, and many major digital assets reached levels not seen in several months. 

Crypto Stabilises After Washout, Signs of Recovery Emerge

While the crypto market dropped to a fresh yearly low on April 7, most overleveraged long positions had already been flushed out. This helped reduce excess risk and created room for a possible rebound.

Historically, large-scale liquidation of long positions tends to release leverage risk and stabilize the market, facilitating the formation of a bottom and initiating a “post-deleveraging recovery” phase.

CoinGlass

Signs of that rebound followed later in the month. On April 23, the market recorded its largest short liquidation of the year, with over $600 million cleared—about 88% of total liquidations that day, according to CoinGlass. They stated that:

Despite this shift, long liquidations remained far larger overall during the period. Even at their peak, short losses never came close to the massive long wipeouts seen in early February. CoinGlass noted this imbalance as a sign that bullish sentiment remained strong throughout the market.

Meanwhile, the crypto market as of today is flashing green, with sentiment continuing to improve. Bitcoin is currently trading around $111,000, after closing above $112,000 just yesterday—a new all-time high. Ethereum is also gaining ground, rising over 6% in the past 24 hours. Other major altcoins are following suit, pointing to renewed strength across the broader digital asset space.