On January 31, East 8 Time, BTC, ETH, and SOL simultaneously retreated from their highs, triggering a wave of concentrated deleveraging across the entire market. The prices of the three major cryptocurrencies fell below key support levels: BTC fell below $82,000, ETH fell below $2,600, and SOL fell below $110, leading to a large-scale liquidation of derivatives positions across the network. According to statistics, the total liquidation amount within 24 hours reached $713 million, with ETH-related liquidations accounting for approximately $49.53 million, indicating that high Beta assets represented by ETH became the main battleground for this round of deleveraging. This volatility occurred during a technical correction window after three consecutive weeks of price increases, where high leverage combined with liquidity contraction amplified the price crash effect. The subsequent market evolution will heavily depend on the depth and pace of the deleveraging process.
Overview of the Decline of the Three Major Cryptocurrencies from Highs
● Price Path and Volatility Range: On January 31, BTC oscillated downwards from its high and fell below the $82,000 mark, testing the lower edge of this range multiple times during the day; ETH quickly fell below $2,600 after facing pressure from above, with limited rebound strength during the session; SOL also fell below the $110 mark, with passive buying support below, showing a typical deleveraging trend of initially slow retreat followed by accelerated decline.
● Comparison of Retracement Magnitudes: In terms of 24-hour declines, BTC fell approximately 1.30%, showing relatively strong performance; while ETH's decline was in the range of 4.9%-5.1%, and SOL's decline was about 5.12%-5.48%, highlighting a difference in decline magnitude nearly four times greater than BTC, emphasizing that ETH and SOL bore the main adjustment pressure in this round of volatility, with high leverage and higher risk appetite funds concentrated on these two asset types being passively cleared.
● Timing of the Technical Correction: This decline occurred after BTC and ETH ended three consecutive weeks of increases, with prices having significantly deviated from the equilibrium zone, combined with high financing rates and overly optimistic sentiment, providing a window for a technical correction. In the absence of a single bearish catalyst, the price retracement stemmed more from profit-taking after accumulated gains and the need for leverage rebalancing, aligning closely with the timing of typical mid-trend corrections.
● Whether the Mid-term Structure is Damaged: From the current decline and key price levels, BTC's retracement is limited, and the mid-term upward structure has not been reversed; although ETH and SOL have adjusted deeper, they are still mainly revolving around the previous high area for high-level turnover. This round of correction appears more like a phase of concentrated digestion of leverage and floating profit chips at high levels, rather than a complete trend reversal. Whether the upward momentum can be restarted depends on the completion of deleveraging and the speed of capital inflow.
The Chain of Liquidations from High Leverage Long Positions
● Scale of Liquidations and ETH Weight: In the past 24 hours on January 31, the total liquidation amount across the network reached $713 million, indicating that the intensity of this round of deleveraging has far exceeded that of a normal correction, with ETH-related liquidations amounting to approximately $49.53 million. Given BTC's relatively mild decline, ETH contributed significantly to the liquidation volume, confirming its role as a concentrated area of leverage in this round, with the deleveraging process exerting particularly noticeable pressure on ETH prices.
● Key Price Level Breaks Triggering Chain Liquidations: Market views generally believe that ETH's drop below $2,700 triggered a large number of automatic liquidations of leveraged positions, and the subsequent rapid breach of $2,600 exacerbated the crash. According to analysis institutions, in the current environment, any single-day fluctuation of over 5% is sufficient to trigger a chain reaction, and ETH's approximately 5% intraday decline coincided with this critical range, causing the liquidation chain to spread from high leverage long positions to lower leverage and spot borrowing.
● High Financing Rates Laying Hidden Dangers: Behind this round of chain liquidations is the reality that financing rates on major exchanges have remained high for some time, reflecting excessive optimism in the market regarding the upward trend and abnormally strong demand for leverage. In a high-cost leverage environment, once prices reverse, high leverage long positions not only face rapid shrinkage of margins but also find it harder to "hold on" due to high holding costs, thereby amplifying the scale and speed of passive liquidations.
● Support Loss and Liquidity Withdrawal: Liquidations concentrated at nodes where key support levels were rapidly breached. When prices break downwards, active buying hesitates, and passive selling increases, forming a typical feedback loop of "price crash—insufficient margin—forced selling—further price decline." In an environment where liquidity is already tending to contract, the surge in liquidations further withdraws depth from the order book, amplifying the short-term decline.
Passive Pressure Under Institutional Floating Losses and Cost Inversion
● Floating Loss Data and Tracking Necessity: According to public statistics, a certain institution, Trend Research, currently has floating losses of approximately $378 million, a figure that has market indicative significance, but its specific composition, data standards, and sources still need continuous tracking and annotation, and should not be simply understood as realized losses. Even so, such a scale of paper losses is sufficient to exert continuous pressure on institutional risk control, capital allocation, and subsequent position adjustments.
● Cost Inversion and Margin Pressure: In the case where institutions' holding costs are significantly higher than the current price, price corrections lead to increased margin occupation and accelerated net asset withdrawals, reaching internal or externally set risk limits. To maintain overall portfolio safety, institutions are often forced to reduce positions or hedge, and even if they remain bullish on the medium to long-term trend, they may become passive sellers during this phase, thereby amplifying bearish forces in the short term.
● The Liquidity Role of High Leverage Institutions: Currently, lacking a clear macro or regulatory single catalytic event, this round of market activity is more inclined towards technical corrections combined with high leverage clearances. In such an environment, institutions with higher leverage multiples and tighter risk budgets are more likely to act as "liquidity providers" during increased volatility—through passive stop-losses, position reductions, and closing derivative positions, providing additional volume and selling pressure for the downward market, rather than actively choosing to exit at this time.
● Information Boundaries of Risk Control and On-chain Actions: There remains a lot of unverified information regarding the specific risk control operations of Trend Research, whether they are using certain lending protocols for collateral and adjustments. Related rumors, such as depositing USDT into specific protocols, have not been confirmed by authoritative channels and should not be overly interpreted, nor should they be used to deduce a complete risk control path, to avoid packaging speculation as fact and interfering with the judgment of real risk exposure.
Market Panic Amplified by Whale Address Exposure
● Whale Holdings Remain Significant: On-chain data shows that the widely watched "1011 Whale" address currently holds approximately 198,000 ETH, which, at current prices, still represents a massive position. This means that after significant volatility in ETH, the whale has not completely exited the market but continues to bear market value fluctuations, making its movements an important sentiment indicator for investors.
● Leverage Accumulation and Amplified Correction Effects: Before this round of decline, on-chain records indicated that this whale had shown signs of increasing leveraged long positions, expanding ETH exposure near high prices. Such behavior is viewed as "smart money increasing positions" during a one-sided upward phase, but when the market shifts to a correction, the whale's long positions amplify external speculation about potential liquidations, position reductions, or closures, causing every on-chain transfer, collateralization, or uncollateralization action to be interpreted by the market, thereby intensifying attention and tension during the correction.
● Holding Transparency and Sentiment Transmission: Unlike traditional finance, on-chain whale holdings and some operational paths are highly transparent, and under the amplification of social media and data platforms, it is easy to form a chain reaction of "whale movements—retail panic—followed liquidations." Even if the whale itself has not significantly reduced its position, merely experiencing position fluctuations or slight adjustments can be visualized and interpreted in real-time, exacerbating retail panic exits and follow-up stop-loss behaviors.
● Public Opinion Noise and Fact Boundaries: Surrounding this round of volatility, some so-called "1011 market" have seen individual Binance users' related accusations and complaints, but these contents remain unverified public sentiment, lacking authoritative evidence support. When analyzing market structure and risk transmission, it is necessary to clearly distinguish such emotional voices from verifiable on-chain and price data, to avoid misinterpreting unverified accusations as factual basis.
Risk Transmission Paths in Cross-Asset Declines
● BTC's Anchoring Effect on Corrections: As the pricing anchor and core collateral asset of the entire crypto market, even a decline of about 1.30% in BTC can transmit through margin pricing, collateral discount rates, and risk parameter adjustments to high Beta assets like ETH and SOL. BTC's price correction directly compresses the risk tolerance space of multi-asset portfolios, forcing risk management models to increase discounts and margin requirements for non-BTC assets, thereby indirectly promoting passive reductions in these assets.
● Resonance Amplification of High Beta Assets: When both ETH and SOL's daily declines exceed 5%, there will be a noticeable resonance in derivative long positions, spot leverage, and borrowing scenarios. The price decline triggers both contract liquidations and margin calls, while simultaneously reducing the value of spot collateral, amplifying borrowing liquidation pressure. Under the simultaneous contraction of multiple leverage chains, the price decline slope of ETH and SOL is significantly widened, presenting a "self-reinforcing" characteristic in the deleveraging process.
● Liquidations and Liquidity's Impact on Financing Environment: From the total $713 million liquidation scale across the network and the rapid contraction of liquidity during the session, this event will inevitably suppress financing rates and leverage preferences for some time to come. Exchanges and lending platforms may tighten risk parameters, increase margins, or reduce available leverage multiples, while investors, after experiencing concentrated liquidations, will also be more cautious about increasing leverage, with the overall market leverage level expected to fall back to a more sustainable range in the short term.
● Completion of Deleveraging and Risks of Secondary Crashes: The current round of deleveraging has been reflected in price and liquidation data, helping to free up risk space for mid-term market conditions, structurally enhancing the sustainability of subsequent upward movements. However, it is important to be cautious that if prices approach this round's low points again in a short time, or if additional disturbances occur at the macro or regulatory level, residual high leverage positions may still trigger secondary crashes. Therefore, assessing whether deleveraging is sufficient requires not only looking at the scale of liquidations but also continuously tracking the extent of financing rate declines and the progress of reducing high-risk exposures.
How Long and Short Positions Will Rearrange After Deleveraging
This correction appears more like a concentrated liquidation event under the resonance of high leverage and liquidity contraction, rather than a trend reversal driven by a single black swan. BTC's relative resilience and the deep adjustments of ETH and SOL together depict a typical scenario of "slight correction of the main anchor, concentrated deleveraging of high Beta assets." The phased decline in overall leverage levels helps to release risks for subsequent market conditions, but in the short term, price volatility is unlikely to completely subside.
From the perspective of capital structure, Trend Research and other institutions still have floating losses, and whale addresses still hold approximately 198,000 ETH, indicating that the mid-term long-short game is far from over, with large amounts of chips still firmly in the market. The difference is that after experiencing this round of liquidation, both institutions and retail investors will be more cautious when using leverage, and aggressive strategies with high costs and high multiples will face greater constraints. The differences in risk control and position structures between long and short sides will become a new dividing line for victory and defeat.
Looking ahead, rather than providing a definitive directional judgment, it is more important to focus on data-driven observation indicators: first, whether the financing rates on major exchanges can continue to decline, reflecting whether market leverage preferences are truly cooling; second, whether the subsequent total liquidation scale across the network significantly narrows, to measure the completion of the deleveraging process; third, the direction and frequency of position changes of key addresses like the "1011 Whale", to determine whether large funds are adding positions on dips or reducing positions on rebounds. Following these quantifiable signals, the market will gradually reshape a new long-short landscape.
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