Crypto markets saw a sharp pullback late Monday, triggering over $500 million in long liquidations and erasing earlier gains as bitcoin (BTC) slipped from weekend highs and traders reacted to de-escalating U.S.-China trade tensions.

Coinglass data shows more than $530 million worth of long positions were liquidated in the past 24 hours — with nearly $200 million coming from bitcoin-tracked futures and $170 million from ether (ETH) products.

Liquidations occur when an exchange forcibly closes a trader’s leveraged position due to insufficient margin. It happens when a trader cannot meet the margin requirements for a leveraged position, that is, when they don't have sufficient funds to keep the trade open.

Major cryptocurrencies lost a portion of last week’s triple-digit percentage gains on Monday, with dogecoin (DOGE) and cardano (ADA) each falling as much as 7%, and solana (SOL), xrp (XRP) and BNB Chain’s BNB losing between 5%–6%.

The liquidations marked a reversal from last week’s euphoric rally, which had seen ETH gain 40% and major altcoins push double-digit percentage gains in a wave of short squeezes. That move had triggered over $1 billion in short liquidations — the highest since 2021 — and sent bitcoin briefly past $104,000 before momentum faded.

Markets turned lower during U.S. trading hours Monday after reports of a temporary tariff truce between the U.S. and China, with the removal of several mutual levies and both pledging renewed trade cooperation.

While easing tensions supported equities, the development may have tempered the risk-on narrative that had fueled crypto’s breakout over the past week.

Futures open interest across major exchanges also fell by more than $1.2 billion, suggesting a sharp deleveraging as long traders were forced to exit positions, Coinglass data showed.

Analysts caution that while the near-term flush may reset frothy sentiment, deeper macro moves will still be key for crypto’s next leg up, with eyes on the next Fed meeting in June.

“Right now macro concerns are driving the market and the next Fed decision and outlook remarks in June will likely be the key factor in driving Bitcoin past its previous all-time high,” Jeff Mei, COO at crypto exchange BTSE, told CoinDesk in a Telegram message.

The reported plan to pause the U.S. economy and cut spending to balance the budget will likely put more pressure on the crypto market in the coming months, the BTSE executive added.

“This would stimulate lending and investment in the US economy and hopefully drive growth, avoiding the recession investors are apprehensive about,” Mei added.