Last week, in just a 24-hour period of time, more than 240,000 traders were liquidated. This effectively wiped out over $875 million in capital . What trigger set this bloodbath in to motion? In this case, it was the geopolitical news about tariffs. The result of this geopolitical new was a cascade of forced selling that had nothing to do with Bitcoin’s fundamentals and everything to do with a single, destructive force: leverage.
For years, critics have labeled Bitcoin and many other investments as “risky.” They see its volatility and call it a gamble. They are putting the "enemy label" on to the asset itself instead of the real culprit. Bitcoin isn’t the risk. The risk or lack of risk is determined in your strategy for investing in Bitcoin(and all assets for that matter). The financial graveyard is filled with traders who tried to get rich quick, while the ranks of the wealthy are quietly being filled by those who simply accumulate and wait.
The Predator’s Casino: How Derivatives Put You in Harm’s Way
To understand the risk, you must first understand the weapon being used. The weapons are derivatives. Derivatives are not Bitcoin. They are synthetic, casino-chip versions of Bitcoin. They have names like perpetual futures, options, and leveraged tokens. They are promises, which is definitely not the same thing is owning the asset itself.
Institutions, banks, and exchanges have built a glittering casino around these derivatives. They give the games seductive names like “liquidity farming,” “yield generation,” or “basis trading.” These are simply the marketing labels for various strategies that all share the same toxic ingredient. That toxic ingredient is they require you to use derivatives and leverage. They are designed to lure you into the casino, where the house always has the edge.
When you trade these derivatives, you are not participating in the Bitcoin network. You are placing a bet in a system designed by predators. Your liquidation price is not a secret; it is a public target on a dashboard for market makers and exchanges to see. You are a walking bag of money, and they have engineered a system to take it from you. These platforms profit directly from your liquidation. This is a fundamental conflict of interest that is rarely discussed. However, it is the source of most of the pain and hardship that takes place. When you hear words like, short-squeeze, volatility squeeze, flash-crash etc., you are hearing about real people who are being victimized by the practices.
The Hunt for Liquidations: A Two-Way Street
Every few months, the market is rocked by a violent price swing. The headlines will always provide a convenient narrative. On January 19, it was “tariff news” that supposedly caused $875 million in liquidations, overwhelmingly wiping out leveraged longs [1]. In October 2025, it was a similar story that led to a staggering $19 billion liquidation event [4].
We should be skeptical of these narratives and understand how they are used as the misdirection necessary to pull off this magic trick time and time again. Are we to believe that a single news event is the true cause of such a precise and devastating financial outcome? Or is it more likely that these headlines provide the perfect cover for a coordinated hunt for liquidity?
This is not a one-way street as the predators can and do hunt in both directions affecting both shorts and longs. When hundreds of millions of dollars in leveraged long positions are stacked up, it creates a massive incentive for large players to crash the price and trigger a liquidation cascade. Conversely, when the market is overwhelmingly bearish and leveraged short positions pile up, the incentive flips. This is exactly what happened on January 14, 2026, when a sharp price increase liquidated nearly $700 million in shorts who were betting on a price drop [6].
Leverage makes you a target, regardless of your market direction. What you should realize about the news is that it isn’t the cause, it’s the excuse. From the collapse of sophisticated hedge funds like Three Arrows Capital to the constant, recurring purges of retail traders, the pattern is the same: leverage creates the fuel, and the predators provide the spark to ignite it, up or down [5].
The Winner’s Strategy: Buy the Blood
While the casino gamblers are getting wiped out, a different group of people is winning. The only winners long-term spot asset accumulators. For those who hold actual Bitcoin in their own custody, without leverage, these liquidation events are not a crisis, they are a gift.
Every flash crash is a transfer of wealth from weak, impatient, leveraged hands to strong, patient, unleveraged ones. The predators who engineer these events inadvertently do the long-term holder a massive service. They clear out the gambling and speculative froth, and in doing so, they make Bitcoin available at an artificial discount. These are the best buying opportunities, allowing you to increase your holdings by acquiring the coins of those who were forced to sell.
There is a simple, verifiable fact that is more powerful than any complex trading algorithm. No person in the history Bitcoin has bought and held for at least four years and lost money [7]. This has never happened at any point, regardless of the price they bought at.
This isn’t an opinion. It’s a historical data point. While leveraged traders were getting liquidated by the hundreds of thousands, long-term holders who simply accumulated were seeing their wealth grow at an average annualized rate of 54%, outperforming every other major asset class [8].
The choice is clear. You can enter the predator’s casino and place yourself in harm’s way, or you can opt out of their game entirely. Why not use their manufactured chaos to your advantage, and simply accumulate the world’s hardest asset, and let time do the work for you.
References
[[1] Nasdaq: Crypto Market Update: Trump’s Tariff Threats Trigger US$875 Million Crypto Liquidation Wave](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Enasdaq%2Ecom%2Farticles%2Fcrypto-market-update-trumps-tariff-threats-trigger-us-875-million-crypto-liquidation-wave&urlhash=QDXe&trk=article-ssr-frontend-pulse_little-text-block)
[[2] TradingKey: Crypto Meltdown. 240000 Liquidated, $100 Billion Wiped](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Etradingkey%2Ecom%2Fanalysis%2Fcryptocurrencies%2Fbtc%2F261487053-cryptocurrency-market-capitalization-btc-eth-fed-trump-analysis-trend-tradingkey&urlhash=Th7J&trk=article-ssr-frontend-pulse_little-text-block)
[[3] Galaxy: Institutional Flows & Yield Strategies Drive Crypto Market Maturation](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Egalaxy%2Ecom%2Finsights%2Fperspectives%2Finstitutional-flows-and-yield-strategies-drive-crypto-market-maturation&urlhash=Tqxs&trk=article-ssr-frontend-pulse_little-text-block)
[[4] FTI Consulting: Crypto Crash Oct 2025: When Leverage Met Liquidity](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Efticonsulting%2Ecom%2Finsights%2Farticles%2Fcrypto-crash-october-2025-leverage-met-liquidity&urlhash=9z5-&trk=article-ssr-frontend-pulse_little-text-block)
[[5] CNBC: How the fall of Three Arrows, or 3AC, dragged down crypto investors](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Ecnbc%2Ecom%2F2022%2F07%2F11%2Fhow-the-fall-of-three-arrows-or-3ac-dragged-down-crypto-investors%2Ehtml&urlhash=4PoO&trk=article-ssr-frontend-pulse_little-text-block)
[[6] CoinDesk: Bitcoin and Ether’s Sharp, Mechanical Breakouts Liquidate Nearly $700 Million in Short Positions](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Ecoindesk%2Ecom%2Fmarkets%2F2026%2F01%2F14%2Fbitcoin-and-ether-s-sharp-mechanical-breakouts-liquidate-nearly-usd700-million-short-positions&urlhash=C3FT&trk=article-ssr-frontend-pulse_little-text-block)
[[7] Reddit: Nobody has ever lost money HODLing bitcoin over 4 years.](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Ereddit%2Ecom%2Fr%2FBitcoin%2Fcomments%2F1j2z1u1%2Fnobody_has_ever_lost_money_hodling_bitcoin_over_4%2F&urlhash=fPi3&trk=article-ssr-frontend-pulse_little-text-block)
[[8] iShares: Bitcoin Volatility Guide: Trends & Insights for Investors](https://www.linkedin.com/redir/redirect?url=https%3A%2F%2Fwww%2Eishares%2Ecom%2Fus%2Finsights%2Fbitcoin-volatility-trends&urlhash=wtGz&trk=article-ssr-frontend-pulse_little-text-block)