Crypto Futures Liquidations Hit $577M as Extreme Fear Grips Market

VADODARA, February 4, 2026 — Crypto perpetual futures markets experienced $577 million in liquidations over 24 hours, with Ethereum and Bitcoin accounting for the majority as extreme fear sentiment dominates. This daily crypto analysis reveals a market structure reminiscent of the 2021 correction, where leveraged positions collapsed under similar pressure.

Investigation: The Liquidation Cascade

According to on-chain data from major exchanges, estimated liquidation volumes for major crypto perpetual futures show a clear pattern. Ethereum led with $290 million liquidated, with 70.93% of those positions being long. Bitcoin followed with $260 million liquidated, where 81.17% were long positions. Solana saw $26.72 million liquidated, with an overwhelming 83.57% long ratio. These figures indicate a coordinated long squeeze across major assets.

Market structure suggests this represents a classic liquidity grab. Consequently, forced selling from over-leveraged longs created cascading sell pressure. The high percentage of long liquidations confirms retail and institutional traders were caught on the wrong side of this move. This event mirrors the mechanics described in the Federal Reserve's research on market liquidity, where rapid deleveraging can amplify volatility.

Market Context & Historical Precedent

Historically, liquidation events of this magnitude precede significant trend changes. Similar to the May 2021 correction, where $8.6 billion was liquidated in 24 hours, current conditions show extreme leverage unwinding. In contrast, the 2023 bear market saw more gradual liquidation cycles. Underlying this trend is the expansion of crypto derivatives markets, which now account for approximately 60% of total trading volume according to CoinMarketCap data.

, related developments highlight how market participants are reacting to this stress. For instance, a dormant Ethereum whale purchased $8.7M in ETH amid the extreme fear, suggesting accumulation at perceived bottoms. Additionally, exchanges like Bithumb listed Moonbird (BIRB) despite the sentiment, indicating continued platform expansion.

Technical Architecture & Price Action

Bitcoin's price action shows it trading at $76,402, down 1.88% in 24 hours. Technical analysis reveals a critical Fair Value Gap (FVG) between $78,200 and $79,500 that must be filled for bullish continuation. The Relative Strength Index (RSI) on the daily chart sits at 42, indicating neutral momentum with bearish bias. Volume profile analysis shows high volume nodes clustering around $74,800, establishing that as major support.

Ethereum's chart structure displays similar weakness. Its 50-day moving average at $3,850 acts as dynamic resistance. The liquidation event created an Order Block between $3,720 and $3,680 that now serves as a supply zone. Market analysts note that Ethereum's post-merge issuance rate of approximately 0.5% annually provides underlying structural support, but derivative pressure overrides fundamentals in the short term.

By The Numbers

Why It Matters

This liquidation event matters because it exposes the fragility of highly leveraged market structures. Institutional liquidity cycles typically contract during such events, reducing overall market depth. Retail traders, who often dominate perpetual futures, face margin calls that force irrational selling. Consequently, this creates a negative feedback loop that can extend downtrends.

On-chain data indicates that the proportion of long liquidations exceeding 80% for BTC and SOL suggests crowded trades. This scenario often marks local tops or acceleration points in corrections. The extreme fear sentiment, quantified at 14/100, historically correlates with potential reversal zones. However, sustained fear can also lead to further capitulation if key support levels break.

Expert Commentary

"The $577M liquidation is a mechanical reset of over-leveraged positions. Market structure suggests this is a necessary cleansing before any sustainable rally. Similar to the 2021 cycle, we observe that high long liquidation ratios often precede a stabilization phase, provided core support holds. The critical level to watch is Bitcoin's $74,800 Fibonacci support."

Market Outlook & Price Scenarios

Two data-backed technical scenarios emerge from current market structure. The first scenario involves a bounce from the $74,800 support, filling the FVG up to $79,500. The second scenario sees a breakdown below support, targeting the next liquidity pool at $71,200.

• Bullish Invalidation Level: $79,500. A daily close above this resistance level would invalidate the bearish structure and confirm a trend reversal, likely triggering short covering.
• Bearish Invalidation Level: $74,800. A sustained break below this Fibonacci 0.618 support on high volume would confirm continued downside, potentially leading to another liquidation cascade.

The 12-month institutional outlook remains cautiously optimistic despite short-term pain. Historical cycles suggest that liquidation events of this scale often mark intermediate bottoms in bull markets. For the 5-year horizon, this deleveraging could strengthen market foundations by removing excessive speculation. However, immediate price action depends heavily on whether the $74,800 support holds.