Crypto market plummets, wiping out $100B as Israel attacks Gaza, with ETH and XRP showing the biggest weekend declines.

Ethereum and XRP plummeted dramatically during weekend trading, while Bitcoin remained largely unaffected, and the timing could be significant

The cryptocurrency market often reserves its most unfavorable movements for times when participants are least equipped to handle them.

This was evident on Saturday, when both Ethereum and XRP experienced a steep decline in a brief period, coinciding with already low weekend liquidity.

According to my 30-minute charts, XRP fell approximately 7.98%, ETH decreased about 5.66%, while Bitcoin remained relatively stable with a minor decline of around 3%.

Bitcoin, Ethereum and XRP price action (Source: TradingView)

The overall market suffered a setback of about $100 billion. CoinMarketCap indicated a total cryptocurrency market capitalization of roughly $2.72 trillion, down 3.76% for the day from $2.83 trillion, with a 24-hour trading volume of around $134.69 billion at that time.

Liquidations in the last 24 hours totaled just under $1 billion as of this report, with Ethereum leading the losses at $383 million liquidated.

When observing only the candles, it appears to be yet another dismal red day. However, when considering the context and current global discussions, it feels like something more particular: a weekend market nudged and then slipped.

The headline risks being highlighted

When markets crash like this, attention shifts to the pressing question: was there a weekend trigger, or did the market simply fall through a thin patch?

The timing is hard to overlook, as major news outlets reported Israeli airstrikes in Gaza on Saturday, with at least 30 Palestinians reported dead, including women and children.

This does not automatically imply that the strikes were responsible for the market movement. Cryptocurrency does not operate on a straightforward cause-and-effect basis.

Cryptocurrency continues to be the most sensitive risk-on market that trades continuously over the weekend, meaning macro shocks can influence digital assets more rapidly than traditional markets that remain dormant until Monday.

In the absence of circuit breakers and with limited liquidity during off-hours, cryptocurrency often becomes the first venue where risk is reassessed.

However, it is noteworthy that while Bitcoin has demonstrated relative strength, the overall altcoin market has faced a much sharper decline, reflecting a more pronounced retreat in speculative interest beyond BTC.

Why weekends continue to impact traders

The cryptocurrency market is reactive. News alters sentiment, sentiment shifts positions, and positions can lead to forced flows and liquidations, which is precisely what a thin weekend book struggles to accommodate.

During weekends, crypto loses its shock absorbers.

Fewer traders are active, there are fewer market makers participating, less depth on the order book, and a greater reliance on automated stop orders and perpetual contracts to facilitate price discovery. When prices begin to shift, the market can gap in a manner that feels unjust, largely because it is.

Liquidity analysts have been emphasizing this point for some time: market capitalization indicates size, while market depth reveals fragility. Kaiko has based much of its research on depth-based measures that reflect how much can be traded near spot prices without causing significant price movements.

This framework aligns with our observations: Bitcoin is affected, ETH is impacted more severely, and XRP suffers the most, as the liquidity pool becomes shallower further down the risk spectrum.

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The leverage factor that turns a dip into a drop

Thin liquidity accounts for the rapidity, while leverage explains the intensity.

Deribit’s weekly analytics from Block Scholes outlined how macro shocks have recently affected crypto, including a spike in Japanese government bond yields, a break below $90K for BTC and $3,000 for ETH earlier in the week, and increased demand for downside protection.

They observed that skews in BTC and ETH options fell to around -9%, indicating that puts became significantly more expensive than calls, and ETH funding briefly turned negative as risk sentiment worsened.

You don’t need that precise sequence of events to unfold moment by moment for the takeaway to be significant.

The key takeaway is that the market has been in a position where downside hedging is costly, funding can flip easily, and the marginal buyer vanishes swiftly, especially outside peak hours. In such a scenario, an additional push can be consequential.

The missing weekday demand issue

There is also a subtler issue at play: the market has been depending on weekday flows to maintain order.

This month, US spot Bitcoin ETFs encountered fluctuating flows, erasing early-month gains and highlighting the fact that institutional demand can diminish rapidly.

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When weekday flows are already unstable, weekends become more perilous. There is less natural dip buying, more anxious positioning, and altcoins typically bear the brunt first.

XRP serves as a prime example, having demonstrated how quickly it can unravel when positions become overcrowded. XRP experienced a cascade of liquidations earlier in January as critical levels were breached.

Such movements leave an imprint on the market. Traders begin to treat the asset as one that can gap, and once that perception sets in, they manage it in a manner that facilitates the next gap.

The macro uncertainty that keeps encroaching on crypto

Even if the Gaza incident was the initial trigger, it only resonates because the underlying situation is already volatile.

The broader decline in crypto is part of a risk-off environment, where investors shift towards safer assets and away from speculative investments.

This is also where geopolitical issues have an indirect impact. When tensions escalate, commodities and interest rates can respond, inflation concerns may resurface, and risk assets feel the effects. Financial Times coverage of commodities has been monitoring oil prices rising due to tensions in the Middle East, and this kind of cross-market influence can swiftly seep into crypto sentiment.

Crypto traders do not need to be actively trading oil to feel its impact; they merely need to operate in a world where inflation expectations and yields dictate market behavior.

What lies ahead: three plausible scenarios

Here is the crucial part that matters more than the candles: what this movement indicates for the upcoming week or two.

One scenario is a chaotic rebound. Liquidity may return as the week begins, panic selling subsides, and the market retraces some of its losses. Volatility could persist as traders recall how swiftly the support crumbled.

An alternative scenario is a gradual decline. If the macro environment remains cautious, and cryptocurrencies continue to be viewed as high beta risk assets, the market may keep searching for a level where buyers feel secure again. Investopedia referred to Fundstrat’s Sean Farrell, who suggested that the mid $70,000s could represent a potential Bitcoin “value zone” bottom if BTC fails to stabilize soon.

The third scenario involves an unusual decoupling. Bitcoin is sometimes perceived as a geopolitical hedge and occasionally behaves as such, but the evidence is inconsistent, often depending on the broader regime rather than daily headlines. If this scenario emerges, BTC would hold up while altcoins remain under pressure, confirmed by cross-asset flows beyond just crypto Twitter.

Where this leaves those reading on a Saturday

Many traders were not even at their desks. This is what makes weekend fluctuations feel personal. One can do everything right during the week, maintain tight risk, exercise patience, and still be affected by a liquidity gap on a Saturday.

Today’s movement aligns with a recurring pattern: thin weekend conditions, altcoin beta, sensitivity to leverage, and a news backdrop that prompts quicker de-risking.

Whether the Gaza strikes were the catalyst or merely the moment the market chose to decline, the lesson remains unchanged: cryptocurrency still grapples with a weekend issue, which manifests most rapidly in ETH and XRP.

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