Author: Huobi Growth Academy

Abstract

In the first quarter of 2026, the cryptocurrency market experienced a historic deleveraging storm. Bitcoin retreated over 40% from its peak, Ethereum fell even more sharply, and altcoins generally lost half their value. This plunge was not merely due to a cooling of market sentiment or regulatory rumors; rather, it was driven by the convergence of three liquidity tightening factors: large-scale unwinding of yen carry trades, the U.S. Treasury’s TGA account rebuilding drawing funds out of the market, and systematic increases in margin requirements in the derivatives market. These factors, combined with the cryptocurrency market’s inherent high-leverage structure and valuation bubbles, triggered a…