Key Takeaways
- Massive Losses: Over $625 million was forcibly closed across the market as Bitcoin’s price jerked up and down.
- Both Sides Hit: Unlike most crashes where only buyers lose, this event “wiped out” those betting on a price drop (shorts) just as badly as those betting on a rise (longs).
- The Cause: A mix of global political news regarding tariffs and a “flash crash” created a perfect storm for traders using borrowed money.
In the world of Bitcoin, a “split liquidation” is a rare and painful event where the market moves so fast in both directions that almost everyone betting on the price gets burned. On January 19, 2025, a sudden price swing did exactly that, wiping out hundreds of millions of dollars from both buyers and sellers in a matter of hours.
What Just Happened?
Bitcoin recently experienced a “whipsaw” movement—a technical term for when the price drops like a stone and then snaps back up immediately. It started when Bitcoin fell from around $95,500 to nearly $91,900 in a single hour. This sudden drop triggered automatic sell orders for people who had borrowed money to bet that the price would go up.
However, the “split” happened when the price didn’t stay down. It bounced back toward $94,000 almost as quickly as it fell. This secondary move caught the people betting against Bitcoin off guard, forcing their trades to close at a loss too.
Why This Event Was Unique
Most of the time, crypto news focuses on “long liquidations,” which is just a fancy way of saying the price crashed and buyers lost money. This week was different because the liquidations were split almost 50/50.
| Group | What they did | Why they lost |
| Longs (Buyers) | Bet the price would go up. | The sudden $3,000 drop hit their “safety limit,” closing their trades. |
| Shorts (Sellers) | Bet the price would go down. | The rapid recovery forced them to buy back Bitcoin at a higher price than they expected. |
According to data from CoinGlass, roughly 150,000 traders were affected. This balanced “wipeout” is rare because it requires extreme volatility in both directions within a very short window.
The “Trigger” Behind the Chaos
The volatility wasn’t random. Several global events collided to shake investor confidence:
- Tariff Fears: News regarding new U.S. trade tariffs on European allies created a “risk-off” mood, making investors pull money out of volatile assets like Bitcoin.
- Bond Market Turmoil: Sharp moves in Japanese and U.S. government bonds caused a ripple effect, tightening the “extra cash” (liquidity) available in the crypto market.
- Automatic Cascades: In crypto, when one person’s trade is forced to close, it can push the price further, hitting the next person’s limit. This creates a “falling dominoes” effect that moves faster than any human can react.
How “Borrowing” Makes the Crash Worse
The reason these losses were so high ($625 million+) is due to leverage. Think of leverage like a magnifying glass for your money. If you have $100 but trade as if you have $1,000, you can make 10 times the profit.
The catch? If the price moves against you by even a tiny amount, you lose everything. During this “split liquidation,” the price swung so wide that even “safe” bets were reached and cancelled by the exchanges.
”When liquidations happen, selling is not a choice. It is automatic. The computer closes the trade to make sure the debt is paid, which is why the price moves so violently.”
What’s Next for Bitcoin?
Following this “flush” of risky bets, the market is looking for a new floor. Many analysts see the $90,000 to $92,000 range as the most important level to watch. If Bitcoin can stay above this, it might gather the strength to try for $100,000 again. If it fails, we could see another round of liquidations as traders get nervous.
For now, the lesson is clear: In a market this volatile, betting with borrowed money can lead to getting hit from both sides, regardless of which way you think the price is going.
FAQ: Understanding Liquidations
What is a liquidation? It’s when a trading platform forcedly closes your trade because you no longer have enough money to cover the losses from a borrowed position.
Why did both sides lose money this time? Because the price went down fast enough to kill the “buy” bets, and then went up fast enough to kill the “sell” bets.
How can I avoid this? The simplest way is to trade only with the money you actually have, rather than borrowing from the exchange to “size up” your trade.
