On Feb. 3, Bybit CEO Ben Zhou estimated that the recent crypto market correction could have triggered liquidations worth up to $10 billion, far surpassing earlier estimates.
On Feb. 3, Bybit CEO Ben Zhou estimated that the recent crypto market correction could have triggered liquidations worth up to $10 billion, far surpassing earlier estimates. According to data from CoinGlass, more than $2.24 billion was liquidated from the markets in just 24 hours. However, Zhou stated that this figure was likely much higher, with his personal estimate putting the liquidation value between $8 billion and $10 billion. Bybit alone saw $2.1 billion in liquidations during this period, Zhou noted in a post on X.
The liquidation event affected over 730,000 traders, with the largest recorded individual liquidation order on Binance for an ETH/BTC trading pair, valued at $25.6 million. Despite these significant numbers, the liquidation data reported by platforms like CoinGlass initially showed a much lower figure, only $333 million. Zhou explained that the discrepancy was due to API limitations on exchanges, which restrict the number of liquidation feeds they can provide at once. To address this, he announced that Bybit would begin publishing all liquidation data to improve transparency.
The timing of the liquidations coincided with concerns over a potential global trade war. On Feb. 1, President Donald Trump signed an executive order imposing import tariffs on goods from China, Canada, and Mexico. This development triggered fears of escalating economic tensions, with some analysts suggesting that such global trade issues contributed to the market’s downturn. Canada quickly retaliated with tariffs on U.S. products, and there were speculations that further trade restrictions could be introduced against the European Union and BRICS nations.
The market volatility also coincided with sharp declines in major cryptocurrencies like Bitcoin and Ethereum. These price drops led to margin calls, forcing traders in long positions to liquidate, creating a chain reaction of additional liquidations across exchanges. Despite the widespread losses, some traders made profits from the downturn. For instance, a trader reportedly earned nearly $16 million by taking a 50x leveraged short position on Ether, betting on its price drop.
The crypto market's struggles are considered closely linked to macroeconomic factors, particularly global trade tensions and inflation concerns. These issues have contributed to market instability, affecting riskier assets like cryptocurrencies. Some experts believe that ongoing economic uncertainty, particularly concerning global trade, could delay interest rate cuts, further increasing inflationary pressures. These factors could continue to weigh on the crypto market and create further volatility in the short term.
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