Cryptocurrency market crashes due to Israeli attack on Gaza; $100 billion disappears as ETH and XRP suffer weekend losses

Ethereum and XRP fall off a cliff in weekend trading, Bitcoin hardly fazed, timing could be important

Cryptocurrencies have a habit of saving their worst moves for the time when people are not ready to deal with them.

That was the mood on Saturday, with liquidity already thin over the weekend, causing Ethereum and XRP to fall significantly in a short period of time.

On my 30-minute chart, XRP was down about 7.98%, ETH was down about 5.66%, and Bitcoin was relatively stable with a relatively small drawdown of about 3%.

The overall market suffered a hit of about $100 billion. CoinMarketCap showed that the cryptocurrency market capitalization was approximately $2.72 trillion, down 3.76% from $2.83 trillion on the day, with a 24-hour trading volume of approximately $134.69 billion at the time of reading.

Total liquidations in the past 24 hours were just under $1 billion at the time of writing, with Ethereum leading the losses with $383 million liquidated.

If you only look at the candles, today looks like an ugly red day. When you look at where it happened and what was being discussed around the world at the same time, it starts to feel like something more tangible. This means that the market gradually rose over the weekend and then fell.

Risks in the headlines that people are pointing out

When the market soars like this, thoughts turn to the obvious question. Was there a weekend trigger, or did the market simply fall into thin air?

The timing is difficult to ignore, as major news outlets reported on Saturday that Israeli airstrikes in the Gaza Strip reportedly killed at least 30 Palestinians, including women and children.

That does not automatically mean that the strike caused the movement. Cryptocurrency is not a market with clear causal relationships.

Cryptocurrencies remain the most sensitive risk-on market, trading continuously throughout the weekend, meaning macro shocks can hit digital assets sooner than traditional markets, which are halted until Monday.

In the absence of circuit breakers and limited after-hours liquidity, cryptocurrencies are often the first place to reprice risk.

Notably, however, while Bitcoin has shown relative resilience, the decline in the broader altcoin market has been even steeper, reflecting a sharp decline in speculative appetite beyond BTC.

Why do we keep doing this to people on weekends?

Cryptocurrency is a reflective market. Headlines change moods, moods change positioning, and positioning turns into forced flow and liquidation. That’s exactly what Weekend Thin Books has a hard time absorbing.

Weekends are when cryptocurrencies lose their shock absorbers.

There are fewer active traders, fewer market makers to lean on, less depth to sit on the order book, and more reliance on automatic stops and purpth flow to do the job of price discovery. When prices start to move, gaps can appear in the market, primarily in ways that seem unfair.

Liquidity researchers have been making the same point for a while: Market capitalization tells you how big something is, and market depth shows how vulnerable it is. Kaiko has built a lot of research around depth-based metrics that figure out how close to the spot you can trade without moving the price too much. opening height

This framework is consistent with what we’ve seen, where the further down the risk curve you go, the shallower the pool, so Bitcoin takes a hit, ETH takes a bigger hit, and XRP takes the biggest hit.

Leverage layer that turns a decline into a decline

Thin liquidity explains speed. Leverage explains violence.

Deribit’s weekly analysis by Brock Scholes reveals how macro shocks have affected cryptocurrencies recently, including a spike in Japanese government bond yields, BTC falling below $90,000 and ETH below $3,000 at the start of the week, and a surge in demand for downside protection.

They noted that option skew on BTC and ETH has fallen to around -9%, meaning puts are priced much higher than calls, and that ETH funding has temporarily turned negative due to deteriorating risk sentiment.

You don’t have to repeat the sequence of events minute by minute to get the important points.

The key takeaway here is that the market is in a situation where downside hedging is expensive, funding can reverse, and marginal buyers disappear quickly, especially during off-peak hours. The extra push could be important in that setup.

Weekday bidding shortage problem

A quieter issue has also emerged in the background, with markets leaning towards weekday flows to maintain order.

This month, U.S. spot Bitcoin ETFs experienced upheaval in flows, erasing gains at the start of the month and highlighting the potential for institutional bidding to cool quickly.

If weekday flows are already unstable, weekends become even more dangerous. There will be less natural push buying, more prudent positioning, and alternative investors will tend to be the first to pay the price.

XRP is a good example because it shows how quickly positioning congestion clears up. XRP suffered a liquidation cascade in early January due to a major level collapse.

Such moves leave a memory in the market. Traders start treating assets as something that can gap, and once a gap occurs, they manage the asset in a way that facilitates the next gap.

Macro fog that continues to hang over virtual currencies

Even if the Gaza headlines were a spark, it would only land because the background is already combustible.

The broader crypto decline is part of a risk-off environment, with investors moving towards safer assets and away from speculative exposure.

This is also where geopolitics indirectly becomes important. As tensions rise, commodities and interest rates may react, inflation fears may re-emerge, and risk assets may feel it. The Financial Times’ commodity coverage tracks oil prices rising due to the risk of tensions related to the Middle East, which is like a pulse between markets that could quickly impact the crypto market.

Cryptocurrency traders are not affected by oil even if they do not trade oil. They just need to trade in a world where inflation expectations and yields still drive decisions.

Three logical paths to what happens next

This is the part that’s more important than the candlesticks, and what this movement signals about the next week or two.

One path is a messy bounce. As the week begins, liquidity returns, panic selling fades, and the market recovers some of its air pockets. Volatility can persist as traders remember how quickly the floor collapsed.

The other path is a lower grind. If the macromood remains defensive and cryptocurrencies continue to be treated like high-beta risk assets, the market may continue to seek a level at which buyers can feel comfortable again. Investopedia quotes Fundstrat’s Sean Farrell as pointing out the mid-$70,000 range as a possible bottom of Bitcoin’s “value zone,” which will be relevant if BTC does not stabilize soon.

The third path is a strange disconnect. Bitcoin is sometimes talked about and sometimes acts like a geopolitical hedge, but the evidence is inconsistent and tends to depend on the broader regime rather than the headlines of the day. If this path emerges, we will see BTC hold up while alternatives remain heavy, and we will see it across cross-asset flows, not just crypto Twitter.

So what happens to people reading this on Saturday?

Many traders weren’t even at their desks. That’s what makes a weekend trip feel personal. Even if you do everything right during the week, keep your risk low, and be patient, you could be clipped by a liquidity gap on Saturday.

Today’s moves fit into a pattern of weak weekend conditions, altcoin beta, leverage sensitivity, and a news backdrop that makes it easier for people to avoid risk.

Whether it was the Gaza attack that triggered it, or the moment when the market chose to go down, the conclusion is the same: Cryptocurrencies still have a weekend problem, and it shows up fastest in ETH and XRP.