The crypto market tanked over 6% on Friday, as nearly $1.7 billion worth of leveraged crypto positions were wiped out.

According to data from CoinGlass, the crypto market experienced the liquidation of $1.71 billion worth of leveraged positions in the past 24 hours. The majority of this wipeout came from long positions, which accounted for nearly $1.59 billion of the total. The scale of the event is more startling, as over $909 million of the liquidations occurred in the first 12 hours alone.

More than 275,000 traders bore the brunt of the volatility, with the largest single liquidation order coming from the crypto exchange HTX, where a trader lost a position worth $80.57 million.

Liquidation occurs when a trader has insufficient funds to keep a leveraged position open in a volatile market. When the majority of liquidations are triggered from long positions, they tend to exacerbate selling pressure and drive prices down further.

In this instance, crypto investors reacted to a number of geopolitical shocks. 

Bitcoin (BTC) has dropped to a 9-month low of around $81,300 as it tanked nearly 8% over the day. Ethereum (ETH), XRP (XRP), Solana (SOL), and other large-cap cryptocurrencies fell 5-7% as the total crypto market cap declined by nearly 6% to $2.9 trillion, marking one of the sharpest single-day declines since the Oct. 10 liquidation event.

The Kevin Warsh effect

The most immediate trigger for today’s liquidations is the increasing odds of U.S. President Donald Trump appointing Kevin Warsh as the next Federal Reserve Chair.

Data from prediction market Polymarket shows that Warsh’s odds surged to 94% on Friday morning, up from just 32% seen yesterday.

Warsh, who had previously served on the Federal Reserve Board of Governors, is viewed by markets as significantly more hawkish, favoring higher interest rates than the previous frontrunners. Investors generally perceive his potential leadership as a move away from the cheap money era that fueled much of the recent crypto rally.

As odds of him taking the helm snowballed, the U.S. Dollar Index marked a strong recovery today, instantly putting downward pressure on Bitcoin and other dollar-denominated assets.

Geopolitical escalation 

Another key contributor to the liquidation event today was the U.S. President’s declaring a national emergency and signing an executive order on Thursday that includes aggressive tariffs on goods against nations supplying oil to Cuba to address threats of rising geopolitical influence and growing military cooperation in the region.

At the same time, intensifying friction between the U.S. and Iran, along with threats of regional retaliation, has unsettled investors. 

Tech earnings report

Investor sentiment also soured after Microsoft’s fiscal second-quarter earnings report raised concerns about the escalating costs associated with artificial intelligence infrastructure.

While Microsoft’s Q2 2026 report beat headline estimates, the market focused on a staggering 66% surge in capital expenditure, totaling a record $37.5 billion, which sparked deep-seated fears over the sustainability of AI-related spending. At the same time, the report showed slowing cloud sales growth.

Microsoft shares fell nearly 12% on Thursday, marking the steepest one-day drop since March 2020, which translated into a massive $440 billion wipeout in market capitalization, which alsosent shockwaves across risk markets like crypto.