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- Debashree Patra
Debashree Patra
- Reviewed by:
Qadir AK
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
- Jul 24, 2025 09:59 UTC
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Crypto Crash Wipes Out $700M as ETH and XRP Lead Long Squeeze Liquidations
Over $700M in long positions were liquidated, leading to sharp drops in BTC, ETH, XRP, and SOL—triggered by a long squeeze, not bearish momentum.
Despite the price dip, funding rates stay positive and sentiment remains bullish, signaling a healthy market reset rather than fear-driven selling.
The recent dip in major cryptocurrencies like Bitcoin, Ethereum, XRP, and Solana isn’t being driven by new bearish bets. Instead, it’s mostly due to what’s called a long squeeze, a market event where bullish traders are forced to exit their positions, often causing sharp price drops.
What is a Long Squeeze and Why is It Happening Now?
A long squeeze happens when traders who expected prices to go up had used leverage to open bullish positions but then exit those positions as prices start falling. This causes further price drops, not because people are turning bearish, but because leveraged bets are being unwound.
This is exactly what played out on Thursday. Bitcoin slipped nearly 1% after failing to stay above $120,000. Ethereum dropped 3%, Solana fell 8%, and XRP led the losses with a 13% decline. The overall crypto market fell 6.8% in the last 24 hours. But this pullback wasn’t fueled by traders turning bearish.
Instead, over $700 million in long positions were liquidated within 24 hours, especially in ETH and XRP. A sudden 1.57% spike in Bitcoin dominance after a 9-day slump surprised the market and triggered liquidations across altcoins.
Open Interest Drops Confirm Longs Are Being Closed
Key futures data support this view. Open interest, which shows the number of active contracts, has dropped across the board. XRP’s futures open interest fell more than 6% over the past two days. Solana dropped 5%, Ethereum 2%, and Bitcoin 1.5%, according to data from Velo.
If new short (bearish) positions were causing the drop, open interest would have risen, not fallen. At the same time, funding rates remain positive, suggesting the majority of remaining traders continue to expect upward moves. If bearish sentiment were taking over, funding would flip negative, so this drop in open interest is a sign of longs closing out positions, not fresh shorts entering.
Why This Isn’t All Bad News
Though prices are down, the long squeeze is often seen as a healthy reset. Meanwhile, the broader crypto market maintains a healthy mood, with sentiment indicators like the Fear & Greed index sitting at a neutral-to-bullish 67/100.
This suggests that while profit-taking is normal, long-term optimism remains intact, and a durable recovery may be forthcoming once leveraged positions are cleared.
It removes overly optimistic and over-leveraged bets from the market, potentially making the setup more stable for future moves. Since there’s no clear rise in bearish sentiment or short selling, it shows the pullback is more technical than emotional.
In short, crypto prices may have dropped, but it doesn’t mean the bulls have given up. It could just be the market clearing out some of the froth before trying to move higher again.
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FAQs
The recent drop was due to a long squeeze, not bearish bets, as overleveraged traders exited bullish positions.
Over $700 million in long positions were liquidated in 24 hours, mainly in Ethereum and XRP.
No, falling open interest shows longs are being closed, not that new shorts are entering the market.
Yes, funding rates remain positive and sentiment is neutral-to-bullish, indicating long-term optimism.
Yes 
No 
