Crypto liquidations surge as futures markets hit new cycle highs

Daily futures liquidations have climbed to their highest sustained levels of the current market cycle, according to a new joint report from Glassnode and Fasanara Digital. 

The data shows leveraged traders are facing heavier losses than in previous years, even during relatively stable price action.

The analysis reveals that Bitcoin and broader crypto futures now flush out an average of $68 million in long positions and $45 million in short positions each day. 

These figures represent a sharp increase from the previous cycle, when typical daily liquidations for longs and shorts were around $28 million and $15 million, respectively.

Higher open interest magnifies risk across major venues

The rise in liquidations reflects a structural shift in trading behaviour.

Open interest has expanded aggressively across major futures venues, driven by a mix of institutional strategies, new ETF-linked flows, and retail traders seeking short-term exposure.

Source: Glassnode Fasanara report

This growth means more positions sit at risk during sharp moves. With futures turnover running at multi-year highs, the market now reacts more quickly when traders become over-leveraged or positioned against prevailing momentum.

Macro events trigger more frequent crypto liquidation spikes

Glassnode and Fasanara note that liquidation spikes are increasingly clustering around macroeconomic catalysts, such as FOMC decisions. 

In several instances, these spikes exceed historical volatility bands, showing how derivatives markets unwind faster when positioning becomes crowded.

Even when spot markets remain relatively calm, futures markets show heightened sensitivity. This divergence suggests that leverage, rather than organic buying and selling, is driving a larger share of intraday volatility.

Stable spot prices hide growing derivatives instability

Despite a muted volatility backdrop for Bitcoin and Ethereum over much of the quarter, liquidation-driven swings have intensified. 

These episodes often appear as sudden wicks or violent intraday reversals, where liquidation cascades force rapid moves in both directions.

The sustained rise in liquidation activity indicates that the market now carries more embedded leverage than in prior cycles. 

This has increased the likelihood that small dislocations trigger outsized reactions, especially when traders cluster around similar levels.

A more reflexive market as leverage rises

As institutional capital, automated strategies, and ETF-related flows continue reshaping market structure, liquidation dynamics may play an even larger role in short-term price action. 

The report indicates that, while the futures market has matured in terms of size and participation, its sensitivity to leverage remains a key source of instability.

Final Thoughts

• Rising daily liquidations show how leverage now drives a larger share of market volatility.
• Traders may need to adjust risk as futures markets continue to unwind more aggressively around macro events.