Crypto traders woke up to a market rout Monday, with the total digital asset market capitalization dropping about 10% and major tokens falling to multi-year lows in a broader financial selloff.
More than $1.6 billion in leveraged crypto positions were liquidated in the past 24 hours, according to data from CoinGlass. The figure may be understated due to limited API reporting from exchanges.
“Risk assets have gapped down to start the week with the market digesting the historically high US tariff levels announced by the Trump administration late last week,” wrote Darren Chu, an associate analyst at BRN, in an April 7 update.
In decentralized finance, investors rushed to protect leveraged positions as ether fell below $1,500.
One large holder deposited 10,000 ETH — worth $14 million at the time — into the DeFi lending platform Sky to prevent liquidation of a $340 million position, according to Lookonchain. The move temporarily cushioned the position, but further price declines could trigger major losses. The trader stands to lose 220,000 ETH if ether drops below $1,119.
Sky, formerly Maker, allows users to borrow its native stablecoin, DAI, by posting crypto collateral. However, borrowers must maintain a 150% collateral-to-loan ratio.
DefiLlama data showed about $600 million in ETH-backed positions could be liquidated if ether falls below $900. Ether was trading around $1,550 at press time, its lowest level since January 2023, according to The Block’s price page.
At least one large whale position has already been liquidated. A trade involving 67,570 ETH was closed after a 14% drop in ether Sunday, costing the trader about $106 million.
Bad actors were not immune either. The alleged scammer behind ZKasino lost $27.1 million from a 20x leveraged bet on Hyperliquid, according to Onchain Lens. The same entity allegedly took more than $40 million from the decentralized casino previously.
"Just a few months ago, ETH below $1,500 seemed impossible. Rather, we had analysts predicting it would soon surpass $4,000," said Kevin Rusher, founder of real-world asset platform RAAC, in an email. "Today, though, that is where the token of 'the world’s computer' is - its lowest level since January 2023. Rather than signaling ETH’s demise, though, this represents a generational opportunity to buy into a token and ecosystem with rock-solid fundamentals."
Analysts said Monday’s selloff was driven by global macro factors rather than crypto-specific issues.
"We are in a period of elevated global uncertainty; escalating tariff conflicts, geopolitical flashpoints, and conflicting macro signals are all colliding," said Dr. Kirill Kretov, senior automation expert at CoinPanel, to The Block. "In that environment, investors are rotating out of risk and into perceived safe havens like U.S. Treasuries and gold. Crypto, especially altcoins, is bearing the brunt."
Speculation of a 90-day tariff pause briefly lifted markets early Monday, but the White House quickly debunked the report. Equity indices such as the S&P 500 erased early gains, losing about $7 trillion in market value in 30 minutes, according to The Kobeissi Letter. Stocks had opened in bear market territory for the first time in three years.
Despite the selloff, some analysts see the potential for a short-term rebound. BRN's Chu said oversold conditions could trigger a bounce as early as midweek, depending on upcoming economic data.
“Some short term relief could arrive in the next day or so as risky assets are increasingly short-term oversold," Chu said. "Odds rising for a minimum multi-week Dead Cat Bounce to begin as early as Wednesday with the release of the US FOMC meeting minutes, Thursday with the US CPI and unemployment claims, and Friday with the US PPI and preliminary UoM consumer sentiment and inflation expectations.”
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