So I was looking back at what happened during that brutal crypto selloff and it's actually a textbook example of how leverage can wreck a market. Bitcoin had been under pressure and when it finally broke below 75k, it triggered this cascade of forced liquidations. Around 237 million in BTC longs got wiped out in a single day, which sounds bad until you realize that was just the tip of the iceberg.

The real story is the deleveraging that's been happening for weeks. Over the past month alone, liquidations hit 4.4 billion. That's not a one-day panic, that's a systematic unwinding of overleveraged positions. Every time Bitcoin dropped, more positions got liquidated, which created more sell pressure, which triggered even more liquidations. It's this vicious cycle that feeds on itself. Open interest in perpetual futures dropped 4.4% in a day, wiping out 26 billion in exposure. When you see numbers like that, you realize the market had way too much leverage built up.

What made it worse was that this wasn't just about crypto. Stocks were getting hit in Europe, monetary policy concerns were spooking everyone, and suddenly risk-off mood spread across all markets. Large holders were underwater too, which added to the nervousness. But here's the thing - when I look at where we are now, Bitcoin's back above 78k and the bleeding has stopped. The liquidation cascade needed to run its course, and it did. The market needed to deleverage, and that's exactly what happened over those weeks. These kinds of corrections, while painful, actually clean out the excess and make the market healthier.