In the wake of the largest single-day cryptocurrency sell-off on record, everyone in the industry scrambled to identify who bore the brunt of the losses.
A staggering $19 billion in speculative positions and investments evaporated, and crypto prices plunged—largely triggered by newly announced harsh tariffs by former U.S. President Donald Trump against China. A confluence of factors—high leverage, automated liquidations, and thin liquidity during an unusual time for global trading—transformed what might have been a modest dip into a widespread collapse of trading positions.
From early morning in Asia through the afternoon in the United States on Saturday, traders, executives, and market data analysts all wondered: who specifically incurred these losses? Was it a single large entity that suffered a catastrophic blow, or was it countless small traders watching their investments vanish to zero? According to CoinGlass, a crypto data-tracking platform, positions held by more than 1.6 million traders were liquidated.
“We’ve conducted extensive checks across our channels, and none of our partners were impacted beyond normal price movements,” said Matthew Hougan, Chief Investment Officer at Bitwise Asset Management. “Of course, effects could still surface later—it takes time for the full impact to become clear. Naturally, we’re not in contact with everyone, but I haven’t heard of any major blow-ups.”
Similarly, Bloomberg’s inquiries among major market players and investors revealed no evidence of a “whale”—a holder of massive crypto positions—collapsing. Yet many suspect that some large entity was caught off guard and suffered unexpected, severe losses.
Automated Algorithmic Selling
In crypto markets, margin calls don’t function as they do in traditional markets. When collateral loses value, algorithms automatically sell assets to cover losses. This means the very infrastructure that keeps crypto markets open 24/7 can rapidly amplify volatility into cascading losses. Trump’s announcement came over a U.S. weekend—after U.S. markets closed but before Europe and Asia opened—leaving few active traders in the market and exacerbating price swings.
Read more: Trump’s Tariff Threat Wipes $6 Billion Off Crypto Markets
Notably, liquidations were concentrated in smaller cryptocurrencies outside Bitcoin and Ethereum—so-called altcoins. These lesser-known tokens typically carry higher leverage and far lower liquidity.
“In altcoin markets, there’s virtually no liquidity beyond the top 5% to 10% of the order book, especially on the buy side,” said Zahir Ibtikar, founder of crypto hedge fund Split Capital. “So when one asset moves sharply off course—and multiple assets do so simultaneously—and market makers lose coordination, the market effectively seizes up.”
The Hyperliquid Exchange
This dynamic was especially evident on the Hyperliquid exchange. Though much smaller than Binance, Hyperliquid saw the highest value of liquidated trades during the 24-hour sell-off—approximately $10 billion, according to CoinGlass data.
Ibtikar added that Hyperliquid experienced the largest volume of position liquidations while simultaneously offering the least liquidity to absorb those trades.
A key contributor was a risk-management mechanism known as “auto-deleveraging.” Designed to automatically close profitable or highly leveraged positions when liquidations exceed available insurance funds, exchanges deploy this feature to protect themselves during extreme volatility. However, many market participants blame this mechanism for intensifying the sell-off.
“This mechanism isn’t without complications, especially for investors holding more complex portfolios,” said Spencer Halloran, Head of Off-Exchange Trading at crypto investment firm GSR. “Quantitative liquidity providers and strategy-neutral participants can suddenly find their profitable trades closed prematurely due to auto-deleveraging, leaving their portfolios unbalanced and exposed to broader market swings—potentially triggering urgent risk-reduction measures.”
One Entity That Profited
On the flip side, one entity did profit: Hyperliquid Provider (HLP)—a community-owned, collective wallet separate from the main exchange that allows investors to pool assets and act as market makers or liquidation executors. According to data from its public ledger, HLP earned over $30 million in profits on the day of the sell-off by acquiring and closing losing positions.
“There’s also a broader question about who should bear these losses—the exchange and its insurance fund, or the traders themselves?” said Tarun Chitra, co-founder of Gauntlet Networks, a firm specializing in crypto risk modeling.
A Spontaneous Sell-Off
Chitra explained that HLP holds an inherent advantage over individual traders on Hyperliquid due to its algorithmic design and pre-programmed parameters. He also noted that many of the top 50 altcoins by market cap weren’t carrying unusually high leverage levels, suggesting Friday’s crash was likely a spontaneous sell-off triggered by Trump’s market-shaking announcement.
“The way altcoins sold off resembled a genuine financial crisis more than a typical deleveraging spiral,” Chitra said. “This was driven more by immediate panic selling than by the unwinding of highly leveraged positions. That’s why I find some credibility in rumors that a major player was forced to unwind positions—or even collapsed financially.”
Although markets have begun to recover some of Friday’s losses, Edward Chen, CEO of crypto hedge fund Parataxis, believes the full extent of the damage may take days to surface.
“My guess is that over the coming days and weeks, we’ll hear about hedge funds that imploded or market makers that suffered massive losses.”
.png)
.png)
