On Monday, September 22, 2025, the cryptocurrency market was rocked by a dramatic wave of liquidations, wiping out over $1.5 billion in bullish bets and sending shockwaves across the digital asset landscape. The selloff, which unfolded within a mere 24 hours, left more than 407,000 traders with liquidated positions and saw the total crypto market capitalization tumble below $4 trillion, according to data from CoinGecko and Coinglass, as reported by Bloomberg and Cointribune.
The trigger? A domino effect of margin calls and forced sales, amplified by the widespread use of leverage—a strategy that allows traders to borrow funds to amplify their bets. When prices started to slip, the cascade of automatic liquidations was unstoppable. "The market is digesting one of the largest liquidation events of the year," Timothy Misir, head of research at BRN, told Bloomberg. "While structural support from ETFs and institutions remains intact, the short-term setup is fragile."
The carnage was widespread. Ether (ETH), the second-largest cryptocurrency by market capitalization, plunged as much as 9% to $4,075, with nearly $500 million in leveraged long positions liquidated. Bitcoin (BTC) also took a hit, dropping 3% to $111,998 at one point, with $284 million in long positions erased. Other major altcoins didn’t escape the turmoil: Solana (SOL) fell 4% with more than $95 million liquidated, XRP dropped 5.7% with $79 million wiped out, and Dogecoin (DOGE) plummeted 10%, losing over $62 million. BNB, ADA, and LINK also suffered losses between 5% and 11%, according to Cointribune.
By 10 a.m. New York time, there was a slight recovery—Ether was down 6% and Bitcoin down 2%—but the damage had been done. This was the largest liquidation event since March 27, 2025, and it left many investors reeling. The breadth and depth of the selloff stood out, with commentators noting that several top tokens were nursing double-digit losses over the previous five days, based on Bloomberg-compiled data.
The mechanics behind the crash were as familiar as they were brutal. Leverage, always a double-edged sword, can magnify gains in a rising market but turns merciless when prices reverse. As prices dropped, margin calls forced traders to sell, which in turn drove prices even lower, creating a vicious cycle. "The massive use of leverage amplified the drop and caused a spiral of automatic sales," Cointribune explained. The smaller-cap cryptocurrencies were hit hardest, their prices more sensitive to sudden outflows.
Adding fuel to the fire were the actions—and alleged motivations—of major crypto exchanges. Marty Party, a well-known commentator in crypto circles, claimed on X (formerly Twitter) that "exchanges pocketed $631 million on this purge of the perpetual contracts market. They will buy back their own crypto with these profits. That’s their strategy until regulation bans it." While these accusations remain unproven, they echo a growing sense of distrust among investors toward centralized trading platforms, especially when profits from liquidations are so substantial.
Institutional investors, who had been a stabilizing force in the market earlier in the year, appeared to be pulling back. Shares of digital-asset treasury firms, such as Michael Saylor’s Strategy and Japan’s Metaplanet Inc., have retreated sharply. Metaplanet, in particular, has seen its valuation drop by 67% since mid-June, a stunning reversal for a company once touted as a local equivalent to Saylor’s aggressive Bitcoin strategy. George Mandres, senior trader at XBTO, offered his perspective: "It feels like the market needs a breather, with some participants concerned that the ‘DAT-trade’ is losing steam and there are no more meaningful inflows on the horizon." DAT, in this context, refers to digital-asset treasuries—publicly-listed vehicles set up to hoard tokens like Bitcoin and Ether.
The funding rate for Ether perpetual futures—the fee paid between traders to keep leveraged positions open—turned negative, reaching its lowest level since last year’s unwind of the yen carry trade, according to CryptoQuant. This signals that short sellers are now in control, paying longs to hold onto their positions, and underlines the bearish sentiment that gripped the market during the selloff.
Interestingly, while cryptocurrencies were battered, traditional safe havens like gold soared. Gold reached an all-time high of nearly $3,720 an ounce on the same day, and silver also advanced. The Federal Reserve’s decision to cut rates by a quarter point the previous week had buoyed gold and equities, but Bitcoin’s response was muted in comparison. Sean McNulty, Asia-Pacific derivatives trading lead at FalconX, observed: "The disappointment stands out compared to tradfi, where equities have held up relatively better while crypto underperforms, reinforcing the sense that this move is more idiosyncratic to the asset class."
Bitcoin, for its part, has been trading in a relatively narrow range—between $110,100 and $120,000—since early July, showing subdued volatility compared to its usual wild swings. During that period, Ether and Solana had been the darlings of crypto traders, rallying 74% and 52%, respectively, since the start of July. But the events of September 22 wiped away much of those gains in a matter of hours.
The recent selloff has left many wondering whether this was merely a technical correction or the start of a more significant structural shift in the crypto market. As Cointribune put it, "Are we witnessing a mere technical correction, or the beginning of a structural disengagement of the crypto market?" The drop in institutional demand, combined with suspicions of exchange manipulation and the extreme volatility on display, could slow the influx of new money into digital assets.
For now, the crypto world is left licking its wounds, reassessing risk, and bracing for whatever comes next. The events of September 22, 2025, serve as a stark reminder of the market’s vulnerability and the perils of leverage in an asset class notorious for its wild rides.
