Crypto Liquidations Top $2.5B Amid US Government Shutdown

Panicked investors triggered a violent $2.5 billion liquidation event as Bitcoin and Ethereum prices plummeted to multi-month lows. This digital carnage reflects a broader flight from risk assets as the total crypto market capitalization contracted 7.5%.

The catastrophic drawdown accelerated on 31 January 2026 across global exchanges following the official commencement of a partial US government shutdown. Traders witnessed Bitcoin (BTC) sliding to $77,195 while Ethereum (ETH) suffered a steeper 52% retreat from its peak.

Market participants fled into cash because of escalating fears regarding a potential AI investment bubble and domestic fiscal instability. Persistent outflows from spot Bitcoin ETFs intensified the selling pressure as institutional allocators rotated heavily into defensive treasury positions.

Leveraged long positions faced mechanical wipeouts through automated margin calls that cascaded across decentralized and centralized platforms alike. Consequently, Ethereum traders endured the primary brunt of the carnage with $1.14 billion in forced liquidations during Saturday.

UAE Sheikh Acquires Secret Stake In Trump Project

An investment vehicle backed by Emirati Sheikh Tahnoon bin Zayed Al Nahyan secretly purchased a 49% stake in World Liberty Financial. The $500 million deal was signed by Eric Trump just four days before the presidential inauguration in January 2025. This private transaction made the Abu Dhabi entity the largest outside shareholder in the family-linked cryptocurrency venture.

The revelation has intensified scrutiny because the administration later approved advanced AI chip exports to the UAE. Sheikh Tahnoon chairs G42, a technology firm that secured thousands of Nvidia processors months after the secret investment. Democratic lawmakers have officially requested a formal investigation into potential conflicts of interest regarding these deep financial ties.

Infamous Hyperunit Whale Exits Position With Massive Loss

The trader known as the Hyperunit whale fully exited an Ethereum long position this week for a $250 million loss. Arkham data confirmed the catastrophic exit after the price of ether dropped sharply toward the $2,400 level. The trader’s account on the Hyperliquid platform now holds just $53, effectively erasing all prior gains.

This stunning collapse follows the whale’s October 2025 windfall where he profited $200 million by shorting the market. Analysts noted that the perfectly timed bet occurred just minutes before a major tariff announcement triggered a global crash. Despite his earlier success on Hyperliquid, the trader’s high leverage and falling crypto prices led to this recent total liquidation.

Step Finance Investigates $30 Million Treasury Breach

Solana portfolio tracker Step Finance disclosed a major security breach this Sunday that compromised several treasury and fee wallets. Onchain data reviewed by CertiK shows that 261,854 SOL was unstaked and transferred to an unknown address during Asian trading hours. The incident resulted in a loss of approximately $30 million for the decentralized finance platform.

The native STEP token plummeted over 93% in value within 24 hours as panicked investors fled the protocol. Step Finance immediately activated emergency remediation protocols while working with top cybersecurity professionals to investigate the specific attack vector. The team stated that user funds remained unaffected while they notified relevant legal authorities about the theft.

Data of the Day

Large investors holding 10,000 BTC or more are currently the only group buying Bitcoin as prices decline. Glassnode data shows a clear divergence where the largest whales have entered a light accumulation phase near the $78,000 level. In contrast, smaller retail cohorts with less than 10 BTC have been net sellers for over a month.

The number of unique entities holding at least 1,000 BTC increased to 1,303 during the recent market correction. This specific trend suggests that institutional players are absorbing the supply being distributed by risk-averse retail participants. While the broader sentiment remains anchored in fear, these large holders are positioned for a potential long-term bullish recovery.

More Breaking News

• The European Commission issued formal notices to 12 countries, including Spain and Poland, for failing to implement new crypto tax transparency rules.
• President Trump nominated former Fed governor Kevin Warsh to succeed Jerome Powell, a move that recently contributed to a major crypto market slide.
• White House officials will host a high-level summit on Monday to resolve disputes between banks and crypto firms over proposed stablecoin reward regulations.
• Sam Bankman-Fried ramped up his public support for Donald Trump, as betting odds for a presidential pardon reached 17%.
• Michael Saylor hinted at another Strategy Bitcoin purchase on Sunday, even as the company's stock price faced steep weekly declines.
• Vitalik Buterin pledged roughly $45 million in ETH to personally fund open-source privacy and security projects over the coming years.
• BitMine Immersion faced over $6 billion in unrealized losses after aggressive Ethereum purchases were immediately followed by a sharp downturn in market prices.

For the latest updates on digital asset markets, follow us on X @Datawalletcom.