Key Insights:
- Nearly $4 billion was lost in altcoins after a 5–8% dip, exposing the weakness of the crypto market.
- Heavy leverage made losses worse, while Binance spot trading shows stronger real demand building.
- The crypto market’s next big rally depends on spot buying, not hype-driven leverage bets.
The crypto market just faced a hard lesson. A small dip of only 5–8% erased nearly $4 billion in long positions across altcoins, making headlines in the crypto news column.
This was not a crash, but the loss was huge because the market is filled with leverage. Traders are betting too much with borrowed money, and even small pullbacks now trigger big forced selling.
This shows how weak the market setup is. Bitcoin stayed more stable with only mild losses, but many altcoins fell hard.
The question now is simple: if the market cannot handle small dips, how can it support big rallies?
Leverage Turns Small Dips Into Big Crypto Market Losses
Liquidations happen when traders use borrowed money to open big bets, and the price moves against them. Exchanges then force-close their positions.
On September’s pullback, that is exactly what happened. The total crypto market loss was almost $4 billion.
The size of the loss compared to the small dip shows a big problem. The crypto market is not going up because of real buying. It is going up because of borrowed money bets.
When those bets go wrong, the selling looks much bigger than the dip itself.
Some traders try to balance risk with what is called delta-neutral trading. This means they buy on spot but also short on futures.
But even these positions add pressure to the futures market. When they unwind, they also add to the forced selling. So even “safe” strategies can make the market weaker.
We can see this in the data. On Bybit, the taker buy/sell ratio spiked to 11.7 and then 18.8 in just days, Maartunn noted. These numbers show that big long positions were opening fast.
But when too many traders are on the same side, even a small drop can wipe them out.
Even though this kind of positioning is for BTC, it does help understand how things work in a rallying market.
This heavy use of leverage is the first reason why future rallies are in doubt. If a tiny correction can erase billions, then bigger rallies will always be weak.
Crypto Market: Spot Buying Could Be the Way Out
There is one positive sign for the crypto market amid liquidation woes. Spot buying, which means traders buy coins without borrowing, is starting to return. Binance is leading this.
Data shows that Binance’s Bitcoin spot volume has crossed $36 billion on peak days, while all other exchanges combined handle only $12–15 billion.
Another number is the volume delta, which compares buying versus selling. For much of the past year, more coins were sold than bought, with selling sometimes higher by $8 billion.
But lately, the balance has turned positive, which means more buyers than sellers.
Market share also shows this change. Binance now often has more than 70% of all Bitcoin spot trading.
Other exchanges, which once had the bigger share, are shrinking. This means most of the real buying is now happening on Binance.
Why does this matter?
Spot demand makes the crypto market stronger. When people buy coins and move them off exchanges, they are not ready to sell quickly.
This stops small dips from turning into bigger crashes. Borrowed money trading does the opposite: it creates fast moves that can disappear in seconds.
The timing also matters. With Federal Reserve rate cuts expected soon, investors may move money into assets like crypto.
If that money goes into spot buying, the market could finally get a stronger base. But if traders keep using leverage, the same problems will come back.
A Big Choice Ahead for the Crypto Market
This week’s liquidation wave is not just a number. It is a warning. The crypto market cannot build long rallies on borrowed bets. The $4 billion lost in one small dip shows how thin support is.
If traders want a real rally that lasts, the shift must be from only derivatives to real buying. That means more spot demand, more holding, and less chasing quick moves with borrowed money.
The rise in Binance’s spot volume shows what this might look like and how that can help.
But until this change happens, future rallies will remain at risk. Every dip will carry the threat of another round of forced selling.
For now, the crypto market has a big choice ahead: keep chasing with borrowed money and risk collapse, or build with real buying and make rallies stronger.