Crypto Wipeout Approaches $1 Billion in the Wake of Musk-Trump Conflict and Bitcoin Volatility

The crypto market has been shaken by an unprecedented $1 billion liquidation event, prompted by increased volatility in the wake of the public conflict between Elon Musk and American President Donald Trump. Many cryptocurrencies dropped fast and sharply after investors struggled to cope with losing money.

When politics become uncertain, the value of Bitcoin depends on the news.

Bitcoin’s price has been up and down in the past 24 hours for traders. After jumping close to $105,800, BTC dropped as low as $100,400, before staging a partial comeback to approximately $104,100 levels at the writing of this article. Even with this regain, Bitcoin is still down almost 2% on the daily chart.

Other significant cryptocurrencies have not been so strong. Ethereum (ETH) fell by nearly 6%, with Dogecoin (DOGE) losing about 7%, highlighting the overall market's susceptibility to politically sensitive headlines.

The drama played out after Trump showed dismay in Musk in an Oval Office meeting, citing his outspoken opposition to the "One Big Beautiful Bill Act." Musk struck back on social site X, insinuating Trump was embroiled in the Epstein documents, fueling the already tense crypto landscape.

Crypto Market Hit by $970 Million Liquidations

By CoinGlass, the latest price fluctuations have driven a 24-hour high in crypto liquidations that saw total losses on centralized exchanges amount to $970 million.

This included a whopping $854 million (88%) of long positions, reflecting the disparity as speculators who had placed bets on price rises were compelled to close their positions as the market plummeted.

"Liquidation" is the forced closure of a leveraged position when account margin falls below maintenance levels because of unfavorable price action.

At the forefront of the liquidation toll were Bitcoin ($346 million) and Ethereum ($286 million), which, combined, represented over half of all market losses.

Long Squeeze Signals Overleveraged Market

This forced selling wave is simply referred to as a long squeeze—a condition when too much long-leveraged bullishness gets washed out when prices fall precipitously. The prevalence of long liquidations in this flush indicates that many traders were too long, expecting additional gains.

Market observers warn that these squeeze occurrences tend to reset excessively optimistic positioning and can lead to transient price stabilization or new opportunities, depending on sentiment.

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