Traders, Investors Lose Money as Bitcoin Crashes to $81,000, $1.68 Billion Wiped Out in 24 Hours
- Bitcoin and Ethereum fell more than 6% as a leverage-heavy market unwind triggered over $1.68 billion in liquidations
- The sell-off was driven by a mechanical breakdown in derivatives markets, where persistent positive funding rates and crowded bullish bets collapsed
- Broader risk-off sentiment, fueled by a U.S. equity sell-off and renewed geopolitical and tariff concerns, pushed crypto markets into extreme fear
Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
Bitcoin dropped almost 6% in a single session, briefly slipping to the $81,000 mark, while Ethereum posted losses exceeding 6%. The move, which occurred on January 30, 2026, triggered a wave of forced liquidations across derivatives markets.
In just 24 hours, more than $1.68 billion in crypto positions were wiped out, marking one of the most severe leverage resets since the post-ETF rally in 2024, Economic Times reports.
Source: UGC
Nearly 93% of those liquidations came from long positions, underscoring how heavily skewed market positioning had become.
This was not a gradual sell-off fueled by retail fear. It was a structural failure. Elevated leverage collided with declining prices, margin calls cascaded, and order book liquidity evaporated.
Bitcoin alone accounted for roughly $780 million in liquidations, while Ethereum saw over $400 million erased as leveraged bets unravelled.
The concentration of leverage was the key catalyst. Data from CoinGlass and Glassnode showed funding rates had stayed persistently positive for weeks, reflecting aggressive long positioning.
Many traders were using high leverage, betting that ETF inflows and institutional demand would continue without interruption. When price momentum stalled, that crowded trade collapsed rapidly.
Recall that many investors expressed optimism about the upward movement of the price of Bitcoin when it peaked at over $112,000 in July 2025.
Why Bitcoin and other digital assets declined
Broader market conditions amplified the damage. U.S. equities sold off sharply, and risk assets declined in tandem.
Renewed geopolitical tension and tariff threats from the Trump administration pushed investors into a defensive stance. Rather than stepping in to buy the dip, institutional players reduced exposure, accelerating the downside move.
The result was a sharp reset across crypto markets. Bitcoin’s market capitalisation fell to approximately $1.64 trillion, while sentiment plunged into extreme fear.
The Crypto Fear & Greed Index dropped to 16, a level typically associated with periods of intense stress rather than speculative peaks.
This decline was not a rejection of Bitcoin’s long-term fundamentals. Instead, it reflected a breakdown in leverage, liquidity, and confidence occurring simultaneously, a reminder that even strong narratives can unravel quickly when positioning becomes too crowded.
Source: Getty Images
Speaking with Legit.ng, crypto analyst Olumide Adesina explained that Bitcoin’s sharp decline was not caused by any flaw in the network or a security breach, but by excessive leverage in the market.
He said:
"Bitcoin fell due to excessive leverage, not a technical issue. Over $1.68 billion in crypto positions were liquidated in 24 hours, with 93% from long bets."
Adesina noted that funding rates had remained positive for an extended period, signalling crowded bullish trades, and once prices slipped, a wave of margin calls intensified the sell-off across major exchanges.
SEC to generate revenue from crypto transactions
Meanwhile, Legit.ng reported earlier that the Securities and Exchange Commission (SEC) is working on updating its rules for cryptocurrencies.
The SEC acknowledged that bitcoin transactions will generate significant tax revenue, although it did not specify the exact amount.
Also, the commission plans to expand cryptocurrency licensing, allowing citizens to trade on official, regulated exchanges where transactions will be taxed and monitored.
Source: Legit.ng
Victor Enengedi (Business HOD) Victor Enengedi is a trained journalist with over a decade of experience in both print and online media platforms. He holds a degree in History and Diplomatic Studies from Olabisi Onabanjo University, Ogun State. An AFP-certified journalist, he functions as the Head of the Business Desk at Legit. He has also worked as Head of Editorial Operations at Nairametrics. He can be reached via victor.enengedi@corp.legit.ng and +2348063274521.
Olumide Adesina (Cryptocurrency expert and senior analyst at Quantum Economics) Olumide Adesina is a French-born financial market writer and trader who tracks, analyses and reports changes in financial markets. Olumide has over 15 years of working experience in investment trading. He reports news about the international and Nigerian financial markets. His byline has appeared across news platforms like Yahoo Finance, Yahoo New Zealand, CoinDesk, Nasdaq, TheCable, and Africa Report, among others.
