This week in East Eight Time Zone, as Iran announced military exercises in the Strait of Hormuz and the U.S. military increased the deployment of destroyers, geopolitical tensions escalated. Bitcoin and Ethereum led the decline, causing a collective plunge in global risk assets and triggering a series of forced liquidations of highly leveraged long positions across the network. According to CoinGlass data, approximately 212,177 accounts were liquidated in this round of decline, with a total liquidation amount of about $798 million, of which long positions accounted for as much as approximately 86.5%, making bulls the main "casualties." This article will analyze the mechanisms behind this crash along the lines of leverage structure imbalance and geopolitical risk transmission, and assess the potential systemic risks that may be exposed subsequently.
The Leverage Truth of $798 Million Evaporated Overnight
● Liquidation Data Profile: According to CoinGlass statistics, approximately 212,177 accounts across the network faced forced liquidations in this round of decline, with a total liquidation scale of about $798 million. In terms of position direction, the liquidation amount of long positions accounted for about 86.5%, while the proportion of short positions was significantly low, indicating that this was not a typical two-way squeeze, but rather a concentrated sell-off of one-sided long positions, triggering a "long kill long" waterfall structural risk release.
● Long Position Bias Exposure: The proportion of long position liquidations approached ninety percent, intuitively reflecting that the market had previously stacked a large number of trend-following high-leverage long positions on leading assets like Bitcoin and Ethereum. Funds continuously increased their positions in a one-sided upward trend, compressing the margin buffer space. Once the price retraced and triggered the first round of forced liquidations, the subsequent failure of margin calls and systemic reduction mechanisms would amplify selling pressure in a short time, forming a cascading liquidation chain.
● Historical Position Assessment: In absolute terms, the single-day liquidation of about $798 million did not break historical extremes, but it is representative in terms of account numbers and long-short structure: over 200,000 accounts were forced liquidated, with long positions accounting for more than eighty percent, indicating that retail and institutional leverage positions were highly crowded in the same direction. This event is closer to "structural deleveraging" rather than an extreme single large liquidation, having a broader impact on overall market sentiment and risk appetite.
● Risk Boundary Reminder: It is important to emphasize that current public data only provides total liquidation amounts and long-short ratios, lacking reliable evidence for the lower range valuations circulating in the market (such as $350 million to $575 million) and the specific claims about the "largest single liquidation source exchange." For compliance and prudence, this article does not interpret or reference any low-range valuations and specific exchange affiliations that have not been confirmed by mainstream data sources.
From Huang Licheng to OG Whales' High-Leverage Exposure
● Clear Loss Sample: According to Source A, well-known investor "Brother Ma Ji" Huang Licheng suffered a loss of about $2 million in a single day during this round of market fluctuations, which is a verifiable loss scale from his public account data. This case reflects that this round of volatility has not only harvested high-leverage retail contracts but also severely impacted leading investors with substantial asset volumes and market experience under the combination of high leverage and sudden volatility.
● OG Whale Floating Loss: Information from Source A also indicates that an address referred to as "BTC OG Insider Whale" experienced a floating loss of about $84 million in this round. This figure does not equate to realized losses, but its scale is sufficient to illustrate that traditional "diamond hands" and early whales, under the support of derivatives and collateral lending tools, have their leverage and risk exposure far exceeding the early state of merely holding coins, deeply embedded in the current high-frequency, leveraged trading structure.
● Amplification Effect of Large Long Position Liquidations: When such large accounts are concentrated on the long side and have high leverage ratios, the stair-step decline in prices will trigger a series of forced sell orders, directly hitting relatively weak buy orders in the order book. On one hand, the active sell orders instantly increase volume, breaking through the depth of pending orders, leading to amplified slippage; on the other hand, market makers will contract quotes or widen spreads during sharp volatility, further weakening liquidity, causing prices to accelerate their downward distortion, forming a "price-liquidity" two-way feedback.
● Boundary and Privacy Restraint: It is important to emphasize that aside from the publicly disclosed loss scale, information regarding the total asset volume, real leverage multiples, specific opening and closing positions of the aforementioned individuals or institutions has not been verified by authoritative sources. To avoid over-interpretation or interference with individual account privacy, this article will not make subjective inferences about their asset details or complete position structures based on scattered on-chain addresses and social media speculation.
Risk Migration Under Iranian Military Exercises and U.S. Troop Increases
● Geopolitical Pulse of the Strait of Hormuz: Source A disclosed that Iran announced military exercises in the Strait of Hormuz, while the U.S. military increased the deployment of destroyers to enhance its presence. This action, combined with the already tense situation in the Middle East, suddenly amplified the uncertainty of key energy channels, raising the geopolitical risk premium in a short time and adding an external shock source to the already highly leveraged global risk asset market.
● Fund Path Migration: In the context of escalating geopolitical tensions, traditional asset allocation logic often points to "migration from high risk to safe haven." In this event, funds retreated from high-volatility assets like Bitcoin and Ethereum, reassessing the necessity of hedge assets and cash positions. For the crypto market, this rebalancing often manifests as first smashing high-leverage positions, accelerating the pace of liquidations, and then gradually affecting unleveraged spot and surrounding structural products.
● Stalemate Risk and Uncertainty Premium: Source A also mentioned discussions about a 78% risk of government shutdown in the U.S., amplifying macro uncertainty during the same period. The potential risks of fiscal and administrative shutdowns could transmit to asset pricing models through corporate confidence and consumer expectations, leading to an overall decline in investor risk appetite, raising the uncertainty premium through another channel outside of "interest rate hike expectations," increasing the discount requirements for high-volatility assets.
● War Sentiment and Oil Price Signals "To Be Verified": The circulating narrative of "war FUD + soaring oil prices" being the main cause of this round of crypto flash crash currently remains at the emotional level. Public data has not provided a rigorous quantitative correspondence between short-term oil price fluctuations, war expectations, and crypto prices, thus the narrative of "war and oil prices directly triggering this round of crash" should be uniformly regarded as a hypothesis to be verified, rather than a confirmed single causal chain.
Divergence Between Wall Street and Mining Circle on Safe Havens
● Futures Pullback Signal: Source A cites the view of Spartan Capital Securities analyst Peter Cardillo, stating that the pullback in gold and silver futures may indicate that prices have reached recent highs. This suggests that in the traditional commodities and precious metals markets, some institutions have begun to believe that short-term safe haven demand has been somewhat overdrawn, adopting a more cautious attitude towards further chasing high prices in gold and silver, with safe haven sentiment showing characteristics of "high-level dullness."
● Contrast Between Safe Haven Pullback and Crypto Plunge: On one side, precious metals are experiencing pullbacks near high levels, while on the other side, crypto assets are undergoing sharp declines. The difference behind this is the divergence in participant structure and risk preferences. The main funds in gold and silver are more inclined towards long-term asset allocation and hedging needs, while the trading aspect of crypto assets like Bitcoin and Ethereum still primarily revolves around high-frequency trading and high-leverage speculation. Geopolitical events also trigger "safe haven" logic, but exhibit starkly different price feedback in the two markets.
● Cross-Asset Linkage Rather Than a Single Trigger: In this round of pullback, commodities, stocks, foreign exchange, and crypto assets all experienced varying degrees of volatility, but the direction and magnitude were not completely synchronized. This indicates that the market is re-pricing the overall risk at the portfolio level, rather than making isolated judgments on a single asset. For the crypto market, the real pressure comes from: geopolitical and macro uncertainties jointly raising risk aversion, while the high-leverage structure amplifies the speed and magnitude of price adjustments, rather than a single piece of news possessing "decisive lethality."
● Restraint in the Absence of Quantitative Data: It is important to note that current public information does not provide specific decline points and percentages for gold, silver prices, and major U.S. stock indices. In the absence of complete market data, making precise numerical comparisons of these traditional assets can easily lead to cross-market conclusions based on erroneous premises. Therefore, this article only discusses "pullbacks" and "declines" at a directional level, without making any numerical assumptions about missing points and ratios.
Institutional Leverage in the Rumors of Crypto Custody IPO
● Copper IPO Rumors and Official Stance: Source A indicates that crypto custodian Copper is reported to be discussing a potential IPO plan, but the company spokesperson responded that "the company currently has no plans for an IPO," without directly denying reports of internal discussions. Regardless of whether it ultimately goes public, the focus of public discourse around Copper has gradually shifted from a single custody service to its systemic role in the institutionalized and compliant infrastructure landscape.
● The Duality of Custody and Leverage Convenience: The expansion of custody and compliance infrastructure has lowered the technical and compliance barriers for traditional institutions entering the crypto market. Tools including custodial collateral, over-the-counter lending, and structured product issuance are helping institutions more efficiently "leverage" their crypto asset exposure. This process enhances market depth and liquidity, but also means that once a risk event occurs, the concentrated exposure and leverage chains on the institutional side can make the system more prone to "breakpoints."
● Role of Custodial Institutions in the Liquidation Chain: In the context of concentrated long position liquidations, custodial and clearing institutions may play a key role in risk management, margin monitoring, and forced liquidation execution. Custodial platforms must meet the risk control requirements of counterparties and clearing institutions while also considering customer experience, which may manifest in extreme market conditions as more frequent margin call notifications, more conservative collateral discount rates, and more aggressive automatic liquidation rules, thereby affecting liquidation speed and price impact paths.
● Cautionary Boundaries on IPO Details: Currently, there are only market rumors and external speculation regarding specific valuation levels, fundraising scales, and timelines for Copper, which have not been confirmed by the company nor appeared in regulatory filing documents. Out of respect for undisclosed market information and compliance considerations, this article does not make any forward-looking inferences about the timing, pricing range, or potential investor structure of Copper's future IPO.
The Next Squeeze Will Come: Leverage Cycles and Geopolitical Black Swans
This crash is a typical risk resonance triggered by the high-leverage long structure and sudden geopolitical tensions: on one hand, the long-accumulated one-sided long leverage has left the market lacking sufficient margin buffer when facing external shocks; on the other hand, the combination of Iranian military exercises, U.S. troop increases, and the risk of government shutdown in the U.S. rapidly elevated global risk aversion sentiment, igniting this "structural fuse."
The liquidation data and whale loss cases reveal two core issues: first, the risk of institutional funds and large positions is highly concentrated, with excessive crowding on the long side; second, the current liquidation and margin mechanisms exhibit a significant chain amplification effect under extreme market conditions, forming a system that tends to "overshoot" from individual investors to custodial institutions and then to derivatives exchanges during heightened volatility.
In a future filled with geopolitical and macro uncertainties, investors need to shift their focus from single price trends to leverage ratios, margin safety margins, and market liquidity depth. Whether it is spot + lending or contracts and structured products, controlling leverage and reserving liquidity is key to navigating volatility, rather than attempting to precisely time each black swan's arrival.
Finally, it is important to emphasize that all specific numbers in this article come from CoinGlass and Source A and other public channels, and discussions about causal chains such as "war FUD + soaring oil prices" have been clearly marked as hypotheses to be verified. In the highly asymmetric information crypto market, treating speculation as fact itself is a risk; true risk control begins with identifying the boundaries of uncertainty.
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