Like many traders, I learnt the hard way that volatility is a given when you enter the crypto game. There may be massive liquidations at the most unexpected times, and you could be one of them.

For example, just recently, a massive $128 million worth of crypto futures were liquidated across many major exchanges, and you won’t believe how long, just one hour.

Don’t give up just yet, because the key to preventing that from happening is to prepare. Well, let me put 10 years of my trading experience to good use by showing you how to navigate these turbulent periods. I’m going to dive into some of the recent liquidations and explore some strategies to help you navigate this volatile industry. You can expect to learn: 

Exploring Crypto Volatility and Its Root Causes

3 Famous Examples of Massive Crypto Liquidations

$19.16 billion on October 10, 2025

$3.62 Billion on September 22, 2025

$9.94 Billion on April 18, 2021

5 Actionable Risk Management Strategies for Crypto Trading

Let’s start!

Exploring Crypto Volatility and Its Root Causes 

Before we get into anything else, let’s first explore why crypto volatility exists and the forms that it can take. Understanding both these aspects will help you better understand how to prevent becoming a victim of volatile market situations that can lead to liquidation. 

Volatility in crypto stems from a clash of multiple factors, the most significant of which I’ve broken down below:

• New and Evolving Market: The crypto market is rather young and rapidly evolving. There are many new currencies entering the market, creating massive hype and speculation, which can create significant price swings. 
• Rapidly Changing Sentiments: Social media platforms, news channels, and even individual feelings or experiences can hugely influence the sentiment towards different currencies. 
• Regulatory Policies: Crypto trading isn’t governed by any specific global authority, so countries are creating their own policies, which are affecting how crypto is viewed and used, leading to dramatic price swings. 
• Low Liquidity in Smaller Currencies: Many smaller cryptocurrencies have lower liquidity, which means that larger trades can significantly move the price because there are fewer buyers or sellers to absorb the order. 
• Technological Breakthroughs: New technologies, or improvements in blockchain, for example, can create significant hype and price shifts as traders try to explore new possibilities. 
• Political or Economic Tensions: Tense economic or political periods can significantly increase volatility as traders either sell or buy currencies rapidly to keep themselves safe.
• Weak Internet Connectivity: While not exactly a direct player, disconnection or slowdowns in internet speed can cause traders to miss out on split-second windows, causing liquidation. A fast and reliable internet connection can help traders make quick decisions. That’s because trading is all about accessing real-time market data, executing trades efficiently, and monitoring positions without any interruptions. 

Pro Tip: For a reliable internet connection for traders, I highly recommend looking into fiber internet, if it’s available in your area.

These factors can collectively result in volatile changes that include: 

• Fast and Large Price Swings: In volatile conditions, a currency's price can either significantly go up or down, sometimes even by up to 10% in a day, and in a rather short amount of time.
• Massive Liquidations: Liquidation is when an exchange forcibly closes a trader's leveraged position because their margin (the collateral they’ve put up) falls below the maintenance level. Liquidation may also cause the next three points I’ve shared. 
• Emotional Distress: When traders lose a large amount of their earnings, it can adversely impact their mental health, relationships, and even their preference to engage further with crypto. 
• Impulsive Trading: Some traders may try to recover their losses by impulsively trading, which can lead to even more setbacks for them and the market. 
• Behavioral Changes: Naturally, a trader can become excessively cautious or emotionally driven in their trading decisions once they go through a huge loss like liquidation. This can impact their decisions and long-term success adversely.

That about covers all you need to know about what volatility is and how it can result in a trader's nightmare, liquidation. To help you understand the impact of liquidation, I’ve shared a few examples next. 

3 Famous Examples of Massive Crypto Liquidations 

I’ve included some of the major cases of liquidations that I could find, with two being rather recent happenings in October and September 2025. These examples will help you understand how the volatile conditions I’ve shared above lead to liquidation. Let’s explore. 

$19.16 billion on October 10, 2025

In case you don’t know, we’re currently going through a trade war with China. On October 10, 2025, Donald Trump imposed a 100% tariff on all Chinese imports, as a retaliation on China’s export controls of rare earth minerals that could improve American tech and defense. 

The tariffs resulted in a $19.16 billion liquidation, as traders feared a rise in costs for U.S. businesses, disrupted supply chains for semiconductors and rare earth minerals, and growing global economic instability. 

Major cryptocurrencies tumbled, with TTCoin dropping to roughly $101,500 in just a day, Ethereum falling by 12% and Solana by 14%. 

$3.62 Billion on September 22, 2025

On September 22, 2025, the crypto market saw a correction after the U.S. Federal Reserve caused overleveraged long positions to collapse. This led to a $3.62 billion liquidation, marking one of the most synchronized downturns between traditional finance and crypto. 

The Federal Reserve’s aggressive stance on interest rates and liquidity caused fear among investors, and in turn led to an 8% drop in Bitcoin, along with various other digital assets dropping too. 

Retail and institutional traders who had been heavily positioned for consistent gains were liquidated as margin calls outmatched losses.

$9.94 Billion on April 18, 2021

On April 18, 2021, unconfirmed reports of an anti-money laundering operation by American authorities began to make the rounds. At the same time, China was facing short-term mining disruptions. Both of these factors led to panic among traders and resulted in a $9.94 billion liquidation. 

Bitcoin dropped by 15% to $56,000, and Ethereum dropped by 20%, as traders feared that China’s mining restrictions could lead to a potentially adverse impact on the stability of the global blockchain network.

You do not want to be a victim of one of the next such cases to come up, because trust me, they will. To minimize your chances of being liquidated, I’ve explored some actionable strategies that you can follow in the next section. 

5 Actionable Risk Management Strategies for Crypto Trading

Whether you’re new to trading or have been at it for a while, the five strategies I’ve shared here come after a careful examination of other cases like the ones in the previous section and can help you steer clear of liquidation. 

Let’s take a look. 

Stay One Step Ahead

They say knowledge is power, and nowhere does this apply more than in crypto. By regularly analyzing market trends, news, and sentiment, you can predict which way prices will move and plan your strategies accordingly. 

Use Moderate Leverage 

Leverage is when you borrow funds to improve or amplify your trading position. High leverage potentially could result in both a higher loss and a higher profit, even with small-scale price fluctuations. The lower the leverage, the lower your risk of liquidation.  

Set Stop-Loss Orders 

Stop loss orders are orders that you pre-set to automatically sell an asset once it drops to a specified price. This can keep you safe and limit your losses should the market decline rapidly and unexpectedly. Additionally, this step can also help you avoid emotional trades and the need to constantly monitor. 

Manage Position Size 

Your position size is the number of units of any cryptocurrency that you buy or sell in a single trade. You’ll have to choose this based on your risk tolerance, account size, and the volatility of the asset. However, keeping this lower can potentially help prevent significant losses.

Diversify Your Portfolio 

By putting all your capital into just one cryptocurrency, you’re playing with fire. Any sudden market drops can result in liquidation. However, spreading them out over various currencies can keep you safe even if one suddenly drops. 

Crypto Trading – Your Best Decision or Your Worst

I won’t sugarcoat anything and promise you a financially sound lifestyle as soon as you start crypto trading, because it’s a possibility, not a guarantee. 

However, I will say that effective planning can help you turn that possibility into a reality. 

The five strategies I’ve shared above can help you navigate through the volatile crypto market with reduced chances of liquidation. By using moderate leverage, setting stop loss orders, managing your position size, diversifying your investments, and staying ahead of market trends, you can turn crypto trading into one of your best decisions, instead of one you regret.