This article first appeared on GuruFocus.
A swift and brutal unwinding of leveraged crypto positions torched over $1.5 billion in long bets Monday, triggering the largest liquidation event since March. Ether bore the brunt, tumbling as much as 9% to $4,075, as nearly half a billion dollars in bullish wagers on the token were flushed out, per Coinglass. Bitcoin (BTC-USD) briefly dipped 3% to $111,998 before stabilizing, while Solana, Algorand, and Avalanche all slid in sympathy. More than 407,000 traders saw positions liquidated in just 24 hours, dragging total crypto market cap below $4 trillion, according to CoinGecko.
This comes just weeks after the digital asset market looked unstoppable, powered by inflows into publicly listed digital asset treasuries like Michael Saylor’s Strategy and Japan’s Metaplanet. But that momentum may be stalling. Shares of these holding firms have turned south, and traders are starting to question whether the DAT trade has hit a ceiling. George Mandres, senior trader at XBTO, said the market feels like it needs a breather, as fresh inflows slow and the structural bid weakens. Meanwhile, Ether’s perpetual futures funding rate has turned negative for the first time since last year’s yen-carry unwind, a sign short sellers are now dictating terms.
Bitcoin, by contrast, has gone quiet rangebound between $110,100 and $120,000 since early July, even as gold breaks record after record, touching $3,720 an ounce Monday. The divergence has caught investor attention. FalconX’s Sean McNulty points to a widening gap between crypto and traditional assets, with equities holding up while digital tokens bleed out. As of late Monday morning in London, Bitcoin was trading near $112,700 and Ether around $4,170. What was once a clear rotation into risk now looks more idiosyncratic and the bulls may need to rethink their timelines.
