Crypto liquidations nearly triple as leverage rises

Source: Exame
Original Title: Crypto liquidations nearly triple as leverage surges
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Daily cryptocurrency liquidations have nearly tripled this cycle, as rising open interest and activity on exchanges fuel an increasingly leveraged market.

According to a new report from Glassnode and Fasanara, the daily average of futures liquidations rose from about $28 million in long positions and $15 million in shorts in the last cycle to $68 million in longs and $45 million in shorts in the current cycle.

This became most evident on October 10, during an event researchers called “Early Black Friday.” During the liquidation, more than $640 million per hour in long positions were wiped out as bitcoin fell from $121,000 to $102,000. Open interest plummeted 22% in less than 12 hours, from $49.5 billion to $38.8 billion, in one of the sharpest deleveraging episodes in bitcoin’s history, according to Glassnode.

Futures activity has surged, with open interest reaching a record $67.9 billion. Trading volumes in these markets also soared, hitting $68.9 billion in a single day in mid-October, with perpetual contracts accounting for more than 90% of the activity, the report said.

Bitcoin spot volume doubles

Bitcoin’s spot trading volume has also doubled compared to the previous cycle, reaching a daily range between $8 billion and $22 billion, according to Glassnode. During the October 10 crash, hourly spot volume spiked to $7.3 billion—more than triple recent peaks—as traders seized the opportunity to buy the dip rather than exit the market.

The report states that since the launch of spot bitcoin ETFs in the United States in early 2024, the asset’s price discovery process has shifted more to the spot market, while leverage has concentrated in futures. This shift attracted capital to major assets, boosting bitcoin’s market share from 38.7% at the end of 2022 to 58.3% currently.

Capital flows reinforce the same trend: monthly inflows into Bitcoin range between $40 billion and $190 billion, raising its realized capitalization to a record $1.1 trillion and adding more than $732 billion to the network since the 2022 cycle bottom—more than all previous cycles combined.

“This highlights a more institutionalized and structurally mature market environment,” Glassnode said.

The current cycle covers the period from the market bottom in November 2022 to the present. The previous cycle mainly refers to market behavior during the 2021 bull market up to the 2022 collapse.

Bitcoin rivals Visa as a settlement network

The report also highlighted Bitcoin’s role as a settlement network, now rivaling the world’s largest payment platforms. In the last 90 days, the Bitcoin network processed $6.9 trillion in transfers, surpassing the volumes moved by Visa and Mastercard in the same period.

Meanwhile, bitcoin supply is gradually shifting from retail environments to institutional hands. According to Glassnode, about 6.7 million BTC are currently held in ETFs, corporate treasuries, and centralized and decentralized treasuries. Since the start of 2024, ETFs alone have absorbed about 1.5 million bitcoin, while balances on centralized exchanges have declined.