Bitcoin’s Biggest Deleveraging Event Driven by Crypto-Native Traders, Not Traditional Finance

Crypto-Native Traders Drive Bitcoin’s Largest Ever Deleveraging Event

Friday saw roughly $12 billion in Bitcoin futures positions liquidated, marking the largest nominal liquidation event in crypto history and signaling a potential market bottom.

Open interest (OI) — the total value of outstanding futures and perpetual contracts — fell sharply. Prior to the sell-off, Bitcoin’s OI stood at about $70 billion (560,000 BTC). Following deleveraging, OI dropped to $58 billion (481,000 BTC). Adjusting for BTC terms offers a clearer view of the scale, given Bitcoin’s price decline from $122,000 to $107,000 during the event.

Glassnode data shows this was the largest single-day deleveraging in USD terms and the second-largest in BTC terms, behind only the March 2020 COVID crash. While the CME, primarily used by institutional investors, saw little change (OI near 145,000 BTC), Binance experienced a sharp drop from $16 billion (130,000 BTC) to $12 billion (105,000 BTC), indicating the event was concentrated among crypto-native traders rather than traditional finance.

Historically, such large-scale, single-day reductions in OI have often coincided with market bottoms, including the March 2020 COVID crash, China’s 2021 mining ban sell-off, and the FTX collapse in November 2022.

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