The cryptocurrency market experienced a dramatic plunge on Friday, with some digital assets losing up to 95% of their value in less than 24 hours. Despite the severe selloff, investment analysts from The Kobeissi Letter emphasize that the drop is unlikely to reflect any long-term fundamental weakness in the sector.
The sudden downturn was attributed to a convergence of temporary factors that intensified market stress. Among these were excessive leverage positions and heightened risk-taking by traders. Additionally, the announcement by then-US President Donald Trump of imposing 100% tariffs on Chinese imports further unnerved investors. This geopolitical development came during a period of low liquidity, approximately 5 PM on Friday, exacerbating the market’s volatility.
The Kobeissi Letter highlighted the market’s substantial long bias, noting that liquidations totaled $16.7 billion in long positions compared to $2.5 billion in shorts. This nearly 7:1 ratio underscored the vulnerability of heavily leveraged traders to sudden shocks.
“The crash resulted from a perfect storm of immediate technical triggers rather than underlying fundamental deterioration,” the analysts explained. They also expressed confidence that a resolution to the trade dispute would be forthcoming, supporting the premise that cryptocurrencies maintain intrinsic strength over time. The report described the downturn as a necessary technical correction that sets the stage for future growth.
Friday’s selloff led to an unprecedented wave of liquidations, wiping out positions worth approximately $20 billion and forcing nearly 1.6 million traders out of the market within one day. This liquidation cascade eclipsed losses recorded during previous major disruptions, such as the FTX collapse and the Terra/LUNA implosion.
Market data from TradingView showed the Total3 crypto market cap — which excludes Bitcoin and Ethereum — tumbling from $1.15 trillion to roughly $766 billion in a single day, illustrating the widespread impact across altcoins.
Industry voices urge caution as markets absorb these rapid developments. Cory Klippsten, CEO of Bitcoin services platform Swan Bitcoin, advised investors to anticipate ongoing price fluctuations in the near term. He noted that the purge of leveraged positions and the exit of weaker hands could ultimately strengthen market foundations and pave the way for a rally.
Meanwhile, some analysts warn that the reported $20 billion in liquidations may only represent a fraction of the total financial damage endured by market participants, suggesting deeper systemic effects may still unfold.
In summary, while last week’s market shock rattled investors and caused significant short-term dislocations, experts maintain that it does not undermine the overall positive trajectory of the cryptocurrency industry.
