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Bitcoin liquidations erased roughly $20 billion in leveraged positions late Friday, collapsing open interest from about $94B to $70B and forcing a cascade of auto-liquidations. Traders should expect heightened short-term volatility, heavier demand for downside protection, and a consolidation phase with substantially reduced leverage.
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Mass liquidations removed $19–20B of open interest and reset leverage across spot, futures, and options.
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Bitcoin futures open interest plunged from ~ $94B to $70B in one session, while many altcoins dropped as much as 40% intraday.
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Options flows spiked around $108k puts and $120–125k calls, with nearly $5B in notional expiring; data sourced from CoinGecko, Deribit, Coinbase, and K33.
Bitcoin liquidations wiped out $20B in leverage, forcing a market reset; read COINOTAG’s data-led breakdown of open interest, options flows, and tactical steps for traders.
What are Bitcoin liquidations and how did they trigger the recent $20 billion flush?
Bitcoin liquidations occur when leveraged positions (margin, futures, or perpetuals) are forcibly closed by exchanges to cover losses; the recent flush removed roughly $19–20 billion of open interest, producing cascading margin calls that amplified selling and squeezed prices lower within hours.
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How did leverage and derivatives markets respond during the sell-off?
Open interest in Bitcoin futures fell from around $94 billion to $70 billion in a single day — the steepest drop in over two years. Funding rates collapsed to depths similar to the 2022 bear market and roughly $19 billion in open interest vanished over the weekend. Options activity concentrated near $108,000 puts and $120,000–$125,000 calls, with nearly $5 billion in notional tied to expiries, according to Deribit and Coinbase data. K33 research lead Vetle Lunde described the event as “likely destabilizing,” adding that some funds may have been wiped out while the broader price action remained surprisingly resilient.
Published: 2025-10-13. Updated: 2025-10-13. Author/Organization: COINOTAG. Sources: CoinGecko, Deribit, Coinbase, K33 (plain text references).
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Frequently Asked Questions
How much open interest did the Bitcoin market lose in the recent crash?
Roughly $19–20 billion in open interest disappeared over the weekend, with Bitcoin futures open interest dropping from about $94 billion to $70 billion in one session — the largest one-day decline in more than two years.
Why did the market crash so quickly last Friday?
Large concentrated leverage, thin liquidity, and auto-liquidation mechanics combined with macro shocks (including tariff-related headlines) created a cascade: once key stop levels were hit, forced selling propagated across futures, perpetuals, and spot markets, driving rapid price declines.
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Key Takeaways
- Leverage reset: Approximately $19–20B of open interest was liquidated, sharply reducing systemic leverage.
- Options and funding: Options expiries and funding rates signaled increased demand for protection; nearly $5B of notional clustered around key strikes.
- Market structure intact: Despite extreme pressure, spot volumes, ETF flows, and entity-adjusted transfer activity indicate institutional participation and an underlying resilience.
Conclusion
The recent wave of Bitcoin liquidations cleaned out excessive leverage and compressed immediate risk windows, forcing a transition from aggressive directional bets to cautious, volatility-focused positioning. Market indicators — from open interest and funding rates to options skews — now point to a consolidation period where selective positioning and downside protection will dominate strategy. For ongoing, data-driven coverage and tactical analysis, follow COINOTAG’s reporting and the plain-text data releases from CoinGecko, Deribit, Coinbase, and K33.
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Source: https://en.coinotag.com/bitcoin-may-be-consolidating-after-20-billion-leveraged-flush-and-sharp-open-interest-drop/
