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|3 min ReadBitcoin, Ethereum rebound after record liquidation rout
Jax Morales
Senior Analyst
Published
Jan 16, 2026
A brutal Friday, then a bounce
The crypto market is clawing back losses after one of the worst liquidation days in its history. On Friday, Bitcoin slid from 109,000 in roughly seven hours, wiping out the early “Uptober” rally. Ethereum fell to 173, according to CoinGecko.
The session turned into a flash crash of liquidations. Nearly 5.5 billion coming from longs, said Sean Dawson, head of research at on-chain options platform Dervie. By day’s end, liquidations across digital assets neared 16.7 billion were long positions, per CoinGlass. Dawson called it “the largest single-day wipeout in crypto history.”
Risk bled into equities. The Nasdaq fell 3.6 percent. The S&P 500 dropped 2.7 percent. The Dow slipped 1.9 percent. Big move. Incredible speed.
Tariffs lit the fuse, leverage did the damage
The sell-off followed U.S. President Donald Trump’s announcement that he was canceling a planned meeting with China’s President Xi and ordering a “massive increase” in tariffs on Chinese imports, a move he said could be “potentially painful” for Americans. The warning came after Beijing moved to curb exports of rare earths and critical minerals, escalating tensions between the two largest economies.
By the weekend, China appeared to soften its stance. Some analysts suggested the rout looked like a brief geopolitical overreaction. Still, the tape told a clear story. Heavy long bias met thin liquidity. Liquidations piled up. Everybody knows it. Leverage cuts both ways.
What pros say about the move
“What we’re seeing is a textbook relief rally,” said Dean Serroni, CEO of crypto investment manager Merkle Tree Capital. He called Ethereum’s 11 percent pop “pure short-covering and mean reversion” after the market overreacted to the tariff headlines. Serroni pointed to thin selling pressure as open interest reset across derivatives after overleveraged traders were forced out.
Prices are bouncing. Bitcoin is up 5 percent on the day to 4,138, per CoinGecko. Solana, BNB, and Dogecoin are higher by 12 percent, 16.5 percent, and 11.4 percent, respectively. Serroni’s take: “This rout was a geopolitical knee-jerk, not a structural break.”
Not everyone is convinced. British investment platform Hargreaves Lansdown warned this week that Bitcoin is too risky and “shouldn’t be relied upon to help clients meet their financial goals.” That is the tension in this market. A tremendous brand, huge volatility, and a crowd that still wants the upside. The next leg will show whether the bounce has real legs or is just short-covering into resistance.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.