The Dangerous Game of Leveraged Trading: How Geopolitics Triggered a Major Collapse in the Crypto Market

In January 2025, Trump begins his second term, and this political turning point instantly ignites the enthusiasm of the cryptocurrency community. Bitcoin reaches a new all-time high, and market sentiment hits a peak. But this prosperity and celebration do not last long—when a harsh slap of reality hits, the entire market plunges into a frenzy of self-destruction.

An Overlooked Powder Keg

The accumulation of leveraged positions has long been an invisible bomb in the market. Fueled by optimism, traders keep increasing their positions, and open interest continues to rise. Behind this seemingly “stable” upward trend lies enormous systemic risk—just a small price fluctuation can cause this seemingly invincible bullish fortress to collapse in an instant.

The Coming Tsunami of Liquidations

October 10th became a watershed moment. On this day, the market experienced an unprecedented liquidation storm. According to statistics, over 1.6 million traders’ positions were forcibly liquidated, and billions of dollars in leveraged funds vanished into thin air. This is not just a number; it is a microcosm of countless investors’ dreams shattered.

Volatility: The Market’s Final Truth

All optimistic narratives ultimately succumbed to a simple fact—volatility. When prices gap or the market suddenly reverses, those built on leverage dreams collapse in an instant. The deleveraging process resembles a domino effect—one liquidation triggers the next, eventually sweeping through the entire market.

This crisis teaches us: in the crypto market, leverage is not a shortcut to wealth but an unqualified powder keg. Geopolitical events can push prices higher, but only rationality and risk management can safeguard assets.