The cryptocurrency market is still reeling from what analysts now call the largest one-day liquidation event in digital asset history, a staggering $19 billion wipeout that unfolded within hours of U.S. President Donald Trump’s announcement of new China tariffs, according to a detailed Bloomberg report.
Triggered by the surprise tariff escalation, the selloff exposed the fragile balance between high leverage, thin liquidity, and automated trading systems that dominate today’s crypto landscape. From Asia’s early trading hours through the U.S. afternoon session, more than 1.6 million traders were liquidated, data from CoinGlass shows.
Who Was Left Holding the Bag?
In the aftermath, market participants scrambled to determine who absorbed the worst of the losses. Despite widespread rumors of a large institutional “whale” collapse, executives from leading firms told Bloomberg they hadn’t identified any single entity that imploded.
Instead, analysts believe the damage was widely dispersed across retail and leveraged altcoin traders, where liquidity is shallow and volatility magnifies losses. According to Zaheer Ebtikar, founder of Split Capital, many altcoin order books “die” once prices move beyond 10% of their depth, amplifying the crash as multiple assets fell simultaneously.
Hyperliquid and the Role of Auto-Deleveraging
Among the hardest-hit venues was Hyperliquid, a derivatives exchange that saw over $10 billion in liquidations within 24 hours, more than Binance, despite being smaller in size. The platform’s auto-deleveraging (ADL) mechanism, designed to protect the exchange from insolvency, likely worsened the chaos by force-closing profitable positions to offset unfilled liquidations.
“This mechanism isn’t without complications,” noted Spencer Hallarn, global head of OTC trading at GSR. He explained that ADL can leave “market-neutral participants with imbalanced books,” forcing them to unwind positions abruptly and deepening volatility.
Still, not everyone lost. Hyperliquid’s HLP vault, a community-owned liquidity pool that absorbs distressed positions, reportedly earned over $30 million during the selloff by buying assets at steep discounts and reselling them during rebounds.
A Financial Crisis Moment for Crypto?
Industry observers say the sudden plunge resembled a mini financial crisis rather than a typical leverage wipeout. Tarun Chitra, co-founder of Gauntlet Networks, argued that “the way altcoins sold off was driven more by spot panic than pure deleveraging,” suggesting fear-based selling dominated algorithmic triggers.
While Bitcoin and Ethereum have since stabilized, the full extent of the damage remains unclear.
The event serves as a stark reminder that in crypto’s 24/7 ecosystem, liquidity never sleeps, but neither do risks.