Minute Chart Turmoil: How Liquidation of Market-Making Bots Triggers Abnormal Fluctuations in BTC and ETH Markets?

The cryptocurrency market has just experienced a micro-level震荡. In the early hours of February 8, 2026, spot trading of Bitcoin and Ethereum saw abnormal fluctuations exceeding 1% or even 3% within a single minute.

These unusual swings were not caused by macro policy changes or major industry news. Wintermute founder Evgeny Gaevoy analyzed that it is very likely that a market-making bot was liquidated, with losses potentially reaching tens of millions of dollars.

Event Recap

In the early hours of February 8, 2026, the crypto market experienced unusual volatility. From 00:05 to 00:17, the 1-minute spot charts for Bitcoin and Ethereum showed persistent abnormal fluctuations.

The amplitude displayed on the minute charts exceeded normal levels, reaching single-minute swings of 1% or even 3%. Such intense volatility stood out sharply in a relatively calm market environment.

At that time, Wintermute founder Evgeny Gaevoy quickly analyzed and pointed out that this pattern was very likely caused by a liquidation of a market-making bot.

Gaevoy emphasized that this abnormal fluctuation was triggered by bot losses, not malicious market manipulation by market makers. He also clarified that his company Wintermute was not involved in the incident.

Behind the Scenes

Market-making bots play an indispensable role in the crypto market. They automatically provide bid and ask quotes through algorithms, offering liquidity, narrowing spreads, and enabling smoother trading for ordinary traders.

These bots typically place both buy and sell orders simultaneously, profiting from small spreads. When market liquidity is sufficient, they can operate stably and provide continuous service.

However, market-making bots face unique risks. They often use leverage to maximize capital efficiency, which means that during sharp price swings, these bots may face margin shortages and be forcibly liquidated.

Especially when prices move rapidly in one direction, market-making bots can accumulate large losses in a short period. Once they reach the exchange’s maintenance margin level, automatic liquidation mechanisms are triggered.

Chain Reaction

The liquidation of a single market-making bot can trigger a chain reaction in the market, involving multiple layers. First, when a bot is forcibly liquidated, it will sell off large holdings, potentially instantly increasing selling pressure.

During periods of low liquidity, such as late-night trading when volume is lower, this concentrated sell-off can more easily cause sharp price swings. The market may experience a temporary liquidity vacuum, with spreads widening rapidly.

Second, abnormal price fluctuations can activate risk control mechanisms of other bots employing similar strategies. These bots may simultaneously reduce risk exposure or adjust positions, further amplifying market volatility.

Additionally, rapid price movements can trigger a cascade of liquidations among leveraged traders. When Bitcoin or Ethereum prices suddenly drop, highly leveraged long positions may quickly reach liquidation levels and be forced to close.

This vicious cycle of liquidations can create a feedback loop: selling pressure drives prices down, which triggers more liquidations, leading to even greater sell-offs. In markets with widespread high leverage, this effect can be magnified.

Market Impact

The impact of market-maker liquidations on market structure is complex and far-reaching. Directly, such events can temporarily weaken market liquidity.

Market makers are among the main providers of liquidity. When their bots encounter issues or are forced to exit, spreads may widen, and trade execution can become more difficult.

From a price discovery perspective, price swings driven by forced liquidations can distort short-term signals. These movements do not reflect fundamental asset value changes but rather the financial distress of certain market participants.

It’s worth noting that Gaevoy from Wintermute pointed out that even if there were cases of “large institutional liquidations,” they would not have long-term effects.

He compared this to past collapses like Three Arrows Capital and FTX, which showed clear signs of actual liquidations. Currently, rumors mostly come from anonymous accounts and lack reliable sources confirming such events.

Risk Prevention

For retail traders, understanding and managing the risks of such abnormal market fluctuations is crucial. Platforms like Gate offer various tools and strategies to help mitigate risks.

Using appropriate leverage ratios is key to avoiding forced liquidations. While high leverage can increase returns, it also lowers the price tolerance. Small price movements can quickly lead to margin calls.

Setting stop-loss orders is another effective risk management tool. By automatically selling at predetermined levels, traders can limit potential losses and avoid emotional decisions.

For more advanced strategies, consider using Gate’s suite of automated trading bots, including spot and futures grid trading, martingale strategies, smart rebalancing, arbitrage, and cross-exchange arbitrage.

These tools allow users to preset parameters, with the system executing trades automatically, reducing emotional bias and reaction delays. During market anomalies, pre-configured strategies may prove more reliable than impulsive decisions.

Gate’s Perspective

As a leading global crypto trading platform, Gate offers a range of tools and services to help users navigate market volatility. The platform supports trading over 4,400 cryptocurrencies, including Bitcoin, Ethereum, and other major assets.

For traders concerned about abnormal market swings, Gate provides diverse risk management options. Its copy trading feature allows users to mirror the trades of professional traders or signal providers in real-time, with a synchronization rate of up to 99.99%.

This enables even less experienced traders to leverage professional strategies to navigate complex markets.

Gate’s automated tools include spot and futures grid trading, martingale strategies, smart rebalancing, spot-futures arbitrage, and cross-exchange arbitrage. These help users maintain discipline and avoid emotional trading during volatile periods.

Notably, Gate commits to 100% reserve backing, covering over 500 virtual assets. This reserve system, verified through Merkle trees and zero-knowledge proofs, provides an extra layer of security for user assets.

The platform also maintains over $9.478 billion in excess reserves, further safeguarding user funds. In a landscape where traditional market circuit breakers are not yet fully established in crypto, this reserve system offers a certain level of protection for traders.

Summary

As of February 10, the latest Bitcoin price on Gate is $69,200, with Ethereum hovering around $2,000.

Behind these figures, market-making algorithms continue tirelessly, with buy and sell orders acting as invisible hands shaping the next minute’s market movements.

In a highly automated trading environment, every abnormal fluctuation serves as a stress test for market microstructure. As Wintermute’s founder suggested, a single event may not alter long-term trends, but countless such moments are quietly reshaping the liquidity landscape of digital asset markets.