Crypto Bloodbath: $19 Billion Wiped Out as Markets Face Brutal Sell-Off

Global Crypto Market Slides Amid Massive Liquidations and Bhutan’s Blockchain Leap

The global cryptocurrency market is under heavy pressure once again. Within the last 24 hours, digital assets collectively lost 3.41% in value, extending a week-long decline that has now reached more than 11%. Analysts say the downturn is primarily triggered by a $19 billion liquidation wave that swept through major exchanges, intensifying the sell-off and eroding investor confidence.

While liquidation events are not uncommon in volatile markets, this one marks one of the largest since early 2024. The cascade began as overleveraged traders rushed to close positions, sparking a chain reaction across futures and spot markets. The result has been a widespread de-risking phase, with traders rotating capital into Bitcoin as a defensive hedge—ironically, even Bitcoin was not spared from the carnage.

As global risk sentiment weakens and geopolitical tensions rise, the crypto market finds itself at a crossroads between macroeconomic uncertainty and rapid blockchain innovation.

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Massive Liquidations Shake Investor Confidence

Data from CoinGlass shows that the latest sell-off has resulted in long position liquidations worth over $16.7 billion and short liquidations exceeding $2 billion, marking one of the steepest single-day unwinds in recent memory. The total open interest in crypto futures dropped by nearly 10%, signaling a major deleveraging phase.

“The market is going through a much-needed reset,” said crypto strategist James Lowry of BlockWave Research. “After weeks of high leverage and speculative positioning, the liquidation cascade is forcing traders to re-evaluate their exposure, especially as global financial conditions tighten.”

Bitcoin, which briefly hovered above $114,000 last week, is now trading near $112,000 after a brief cooling-off period. Ethereum has dropped around 4% to hover near $4,000, while Binance Coin (BNB) has fallen nearly 9%, extending its month-long bearish trend.

Contributing to the uncertainty are renewed fears about the stability of certain stablecoins. The USST token, issued by stablecoin firm STBL, lost its dollar peg and fell by nearly 8%, further shaking confidence in the digital asset sector. Market observers warn that even minor depegging events can amplify panic, as stablecoins serve as the backbone of liquidity in the crypto ecosystem.

Adding to market jitters are escalating U.S.–China trade tensions, which have spilled over into broader asset markets, including crypto. Analysts note that as traditional investors de-risk portfolios, cryptocurrencies—once viewed as “digital gold”—are now being treated as high-risk assets, mirroring the volatility of equities.

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Bhutan Migrates National ID System to Ethereum

In a move that highlights the growing adoption of blockchain technology by governments, the Kingdom of Bhutan has officially migrated its national identification system to the Ethereum network.

The transition, completed in partnership with the Ethereum Foundation, marks a historic step toward blockchain-based digital governance. The new system enables citizens to securely verify their identities and access government services using self-sovereign digital credentials.

Source: X

According to Bhutan’s Ministry of Digital Affairs, all resident data and identification credentials will be fully migrated to Ethereum by the first quarter of 2026. The migration is being conducted in phases to ensure security, transparency, and privacy compliance.

Ethereum Foundation President Aya Miyaguchi described the initiative as “a world-first example of decentralized technology empowering national identity.”

“This is more than a technological milestone—it’s a human milestone,” Miyaguchi said. “Bhutan is setting a precedent for how blockchain can enhance digital trust while protecting individual data sovereignty.”

By leveraging Ethereum’s transparency and immutability, the system promises to reduce fraud, eliminate bureaucratic inefficiencies, and allow citizens to control how their personal data is shared. The project has drawn global attention as a potential model for other nations exploring blockchain as a backbone for e-governance.

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California Enacts New AI Safeguards for Children

Across the Pacific, the State of California has introduced groundbreaking legislation to regulate artificial intelligence (AI) interactions with minors. Governor Gavin Newsom has signed Senate Bill 243 (SB 243), requiring social media platforms and AI chatbot providers to implement robust age verification systems and display clear disclaimers when users are communicating with automated systems.

The law was inspired by growing concerns over the psychological effects of unregulated AI chatbots on children. Reports surfaced earlier this year linking certain AI companions to increased risks of depression and self-harm among teenage users.

“This legislation is about protecting our children in a world where technology moves faster than ethics,” Newsom said during the bill’s signing ceremony. “AI must be used responsibly—and that starts with transparency.”

Under the new law, AI systems must clearly disclose when users are interacting with non-human entities and ensure that minors are shielded from potentially harmful interactions. Developers are also required to integrate mental health safeguards, including automatic crisis response features when self-harm or suicide-related content is detected.

The regulations, set to take effect in January 2026, will apply broadly to both centralized and decentralized platforms that offer AI-driven interactions. Experts believe California’s policy could become a model for other states and nations seeking to balance innovation with child safety.

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Transparency Concerns Over Crypto Liquidation Reporting

Another major topic stirring debate within the crypto community is the accuracy of liquidation reporting across centralized exchanges.

Jeff Yan, CEO of Hyperliquid and a long-time critic of opaque trading practices, suggested that major exchanges such as Binance may be underreporting or misreporting liquidation data. According to Yan, Binance’s current reporting system only tracks “final liquidation events per second,” potentially masking the true extent of losses during market crashes.

“This creates a false sense of stability,” Yan explained. “When markets move fast, hundreds of positions can get liquidated within the same second, but only one data point gets recorded. That underreports the actual impact on traders and the overall market structure.”

Industry analysts warn that the lack of transparency could distort risk assessments and delay regulatory responses. In an era where billions of dollars can evaporate in minutes, accurate liquidation data is essential to maintaining trust in crypto markets.

CoinGlass data corroborates that the most recent downturn ranks among the top three largest liquidation events in crypto history, with the majority of losses concentrated in perpetual futures markets tied to Bitcoin and Ethereum.

Market participants are now calling for a unified reporting standard—potentially under oversight by global financial regulators—to ensure that liquidation data reflects real-time market stress and prevents misinformation.

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The Bigger Picture: A Market Under Pressure but Maturing

Despite the turbulence, analysts point out that crypto’s current correction phase also represents a maturing market dynamic. Excessive leverage, rapid speculative inflows, and unrealistic price targets have long fueled extreme volatility. The ongoing liquidation event, while painful for traders, could serve as a healthy reset by flushing out weak hands and recalibrating valuations.

Meanwhile, Bhutan’s Ethereum initiative and California’s AI legislation highlight the dual narrative shaping digital transformation in 2025: blockchain’s expanding utility beyond finance, and governments’ growing role in defining the ethical boundaries of emerging technologies.

The crypto industry is thus witnessing two contrasting realities—rapid technological advancement and ongoing regulatory pressure—each pushing the space toward greater accountability and long-term resilience.

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Conclusion

The global crypto market’s recent slide underscores how interconnected digital assets have become with broader macroeconomic and technological developments. The $19 billion liquidation wave, combined with renewed concerns over stablecoin security and exchange transparency, has exposed vulnerabilities in the digital finance ecosystem.

Yet amid the chaos, innovation continues. Bhutan’s adoption of Ethereum for national identity management marks a powerful example of blockchain’s real-world potential, while California’s new AI laws showcase the importance of human-centered governance in the digital age.

Whether the market recovers in the short term or continues its decline, the events unfolding this week make one thing clear: cryptocurrency is no longer an isolated frontier—it is deeply woven into the global financial and technological fabric.

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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