The cryptocurrency market faced a turbulent start to the week as nearly $900 million in leveraged positions were liquidated following a sharp correction in Bitcoin and Ether prices. Ether traders experienced the most significant impact, with forced unwinds amounting to $320 million, followed closely by $277 million in Bitcoin-related liquidations. Solana, XRP, and Dogecoin collectively added another $90 million to the liquidation tally, according to data from Coinglass.
The Market’s Sudden Jolt
So, what triggered this financial maelstrom? The crypto plunge seems tied to a broader market pullback, including a dip in the S&P 500, which has put pressure on risk assets. “This sharp move appears to be the result of overleveraged positioning, particularly following ETH’s recent run-up,” noted a trader from Derixe.xyz. As Ether retreated from $4,700 to $4,400 and Bitcoin slipped to $110,200, the reverberations were felt across the board. This aligns with previous events where Bitcoin and Ether’s swift spike prompted $375M in crypto futures liquidations.
Volatility spiked in the aftermath. Bitcoin’s daily volatility jumped from 15% to 38%, while Ether’s soared from 41% to 70%, according to Derive.xyz. This surge underscores the market’s fragility, especially for Ether, which attracts more leverage. When the tide turns, these positions unravel rapidly, causing pronounced market swings.
Defensive Maneuvers
Investors reacted swiftly, leaning towards defensive strategies. The options market showed a strong preference for puts, marking the highest bias for protective positions in two weeks. The market’s focus now shifts to key psychological levels. Bitcoin has a 35% implied probability of revisiting $100,000 by September-end, while Ether carries a 55% chance of falling back to $4,000, based on market pricing. This is reminiscent of the broader market downturn when crypto markets lost $200 billion as Bitcoin’s price tumbled to a 6-week low.
This divergence between the two leading cryptocurrencies is also evident in futures and volatility trends. CME data highlights record shorts in Ether futures, possibly linked to hedging around digital asset tokenization flows or funding-basis arbitrage. “BTC implied vol collapsed to new record lows post-Powell as a bit of a surprise, leading to a significant divergence vs a (still) rising ETH IV,” commented Augustine Fan, head of insights at SignalPlus, in a message to CoinDesk.
Looking Ahead: A Volatile Path
So, what’s next on the horizon? With key economic indicators such as GDP data due on August 28 and U.S. unemployment figures in early September, traders are braced for further market turbulence. While the recent flush may have cleared some of the excess leverage, the path ahead is likely to remain rocky, especially for Ether. Its positioning appears more stretched, and flows are more concentrated compared to Bitcoin.
As we move towards the end of August 2025, the crypto landscape remains as unpredictable as ever. The recent events have left traders and analysts pondering whether this volatility is just a temporary blip or indicative of a more prolonged trend. Whatever the case, one thing is clear: the crypto market is anything but dull, and market participants should brace for more twists and turns in the coming weeks.
Source
This article is based on: Ether, Dogecoin, Bitcoin Plunge Sees $900M in Bullish Bets Liquidated
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
