Bitcoin Leverage Surge Suggests Derivatives May Drive Future Market Cycles

• Average daily long liquidations have risen to $68 million from $28 million in the last cycle, signaling deeper market leverage.

• Short liquidations average $45 million daily, up from $15 million, as trading volumes hit $68.9 billion in mid-October.

• Open interest reached a record $67.9 billion, with perpetual contracts dominating over 90% of futures activity, per Glassnode data.

Discover how surging Bitcoin futures liquidations are reshaping crypto markets in 2025. Explore leverage trends, spot volume shifts, and institutional impacts—stay informed and position your portfolio wisely today.

What Are Bitcoin Futures Liquidations and Why Are They Surging?

Bitcoin futures liquidations occur when leveraged positions are forcibly closed due to insufficient margin during price swings, amplifying market volatility. In the current cycle, these events have nearly tripled, driven by record open interest and expanded trading activity. According to a report from Glassnode and Fasanara, average daily liquidations now hit $68 million for longs and $45 million for shorts, up significantly from prior levels, exposing the derivatives market’s growing influence on Bitcoin’s price cycles.

Daily futures wipeouts are surging as leverage builds, with a record unwind in October exposing how deeply derivatives now shape Bitcoin’s market cycle.

Daily crypto liquidations have nearly tripled this cycle as rising open interest and broader exchange activity fuel a more heavily leveraged market.

According to a new report from Glassnode and Fasanara, average daily futures wipeouts have risen from about $28 million in long positions and $15 million in shorts in the last cycle to roughly $68 million long and $45 million short this time around.

This was most evident on Oct. 10, during the reset researchers called “Early Black Friday.” During the sell-off, more than $640 million per hour in long positions were liquidated as Bitcoin (BTC) slid from $121,000 to $102,000. Open interest collapsed 22% in under 12 hours, from $49.5 billion to $38.8 billion, in what Glassnode called one of the sharpest deleveraging events in Bitcoin’s history.

Futures activity has expanded sharply, with open interest climbing to a record $67.9 billion. Trading volumes in futures markets have also surged, reaching as high as $68.9 billion in daily turnover in mid-October, with perpetual contracts making up more than 90% of activity, according to the report.

Bitcoin Futures market. Source: Glassnode

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How Has Bitcoin Spot Volume Evolved Amid Rising Liquidations?

Bitcoin’s spot trading volume has doubled compared to the previous cycle, fluctuating between $8 billion and $22 billion daily, as reported by Glassnode. This surge reflects stronger market participation, particularly evident during the October 10 crash when hourly spot volume reached $7.3 billion—over three times recent highs—as investors capitalized on the dip. Since the launch of U.S. spot exchange-traded funds in early 2024, price discovery has increasingly occurred in the cash market, while futures have absorbed more leverage, boosting Bitcoin’s dominance to 58.3% from 38.7% in late 2022. Capital inflows have been robust, with monthly figures ranging from $40 billion to $190 billion, elevating Bitcoin’s realized capitalization to $1.1 trillion and injecting over $732 billion since the 2022 lows—exceeding all prior cycles combined. “This highlights a more institutionally anchored and structurally mature market environment,” stated Glassnode in their analysis. These developments indicate a resilient ecosystem where spot activity provides a counterbalance to futures volatility, drawing institutional capital and stabilizing long-term growth.

Bitcoin spot volume doubles

Notably, Bitcoin’s spot trading volume has also doubled compared with the prior cycle, climbing into an $8 billion to $22 billion daily range, according to Glassnode. During the Oct. 10 crash, hourly spot volume spiked to $7.3 billion, more than triple recent peaks, as traders moved in to buy the dip rather than flee the market.

The report claimed that since US spot exchange-traded funds (ETFs) launched in early 2024, Bitcoin’s price discovery has shifted toward the cash market, while leverage has been increasingly built into futures. This shift has drawn capital into major assets, helping push Bitcoin’s market share from 38.7% in late 2022 to 58.3% today.

Capital flows tell the same story. Monthly inflows to Bitcoin have ranged from $40 billion to $190 billion, lifting its realized capitalization to a record $1.1 trillion and bringing more than $732 billion into the network since the 2022 cycle low, more than all previous cycles combined.

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

Bitcoin’s lack of price strength due to sheepish spot buyers

How Does Bitcoin’s Role as a Settlement Network Compare to Traditional Systems?

Bitcoin has emerged as a formidable settlement network, processing $6.9 trillion in transfers over the past 90 days, outpacing volumes from Visa and Mastercard during the same period, according to Glassnode. This milestone underscores Bitcoin’s scalability and efficiency in handling large-scale transactions, positioning it as a competitive alternative to legacy payment rails. Concurrently, Bitcoin’s supply dynamics are shifting toward institutional custody, with approximately 6.7 million BTC now held in ETFs, corporate treasuries, and various exchange balances. ETFs have accumulated 1.5 million BTC since early 2024, while centralized exchange holdings have decreased, reflecting a broader trend of long-term securing of assets away from retail platforms. These factors contribute to a more mature market structure, reducing reliance on short-term speculation and enhancing Bitcoin’s foundational role in global finance. Experts note that such institutional adoption not only bolsters network security but also facilitates greater integration with traditional financial systems, paving the way for wider acceptance.

Bitcoin competes with Visa as settlement rail

The report also pointed out Bitcoin’s role as a settlement network, which is now rivaling the world’s largest payment rails. Over the past 90 days, the Bitcoin network processed $6.9 trillion in transfers, surpassing volumes handled by Visa and Mastercard over the same period.

Meanwhile, Bitcoin’s supply is steadily shifting away from retail trading venues and into institutional hands. According to Glassnode, roughly 6.7 million BTC is now held across ETFs, corporate balance sheets and centralized and decentralized treasuries. Since early 2024, ETFs alone have absorbed about 1.5 million BTC, while balances on centralized exchanges have declined.

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Frequently Asked Questions

What Caused the Record Bitcoin Futures Liquidations on October 10?

The October 10 event, dubbed “Early Black Friday,” saw over $640 million in long positions liquidated hourly as Bitcoin dropped from $121,000 to $102,000. This sharp 22% open interest collapse from $49.5 billion to $38.8 billion stemmed from heightened leverage amid surging futures volumes, marking one of Bitcoin’s most intense deleveraging episodes, per Glassnode and Fasanara data.

Why Is Bitcoin’s Spot Volume Increasing Despite Futures Volatility?

Bitcoin’s spot volume has doubled to $8-22 billion daily because institutional inflows via ETFs and a shift in price discovery to cash markets encourage dip-buying during volatility. This mature environment, with $732 billion in capital since 2022, attracts steady investment rather than panic selling, as noted in recent Glassnode reports.

Key Takeaways

• Leverage Amplification: Daily Bitcoin futures liquidations have tripled to $68 million for longs, driven by record $67.9 billion open interest and 90% perpetual contract dominance.
• Institutional Shift: Spot volumes doubling to $22 billion and $6.9 trillion in settlements rival traditional rails, with ETFs holding 1.5 million BTC since 2024.
• Market Maturity: Over $732 billion in inflows since 2022 signal a structurally sound ecosystem—monitor leverage to navigate future cycles effectively.

Conclusion

The surge in Bitcoin futures liquidations and the evolution of spot volume highlight a transforming crypto landscape in 2025, where derivatives and institutional capital increasingly define market dynamics. As Bitcoin’s settlement capabilities surpass major payment networks and dominance reaches 58.3%, the ecosystem demonstrates resilience and maturity. Investors should track leverage indicators closely to capitalize on these trends, ensuring portfolios align with this institutionally driven future.