Bitcoin’s Drop Wipes Out $1 Billion in Leveraged Positions
Meanwhile, U.S. spot Bitcoin ETFs drew only $70 million in inflows over the past week, following about $4.6 billion in outflows.
Quick overview
- Selling pressure has intensified Bitcoin's decline, with the cryptocurrency down nearly 30% since early October.
- The broader crypto market has also suffered, with small-cap tokens plunging nearly 70% this year.
- Market dynamics are influenced by liquidation cascades, exacerbated by a fragile global economic environment.
- Despite recent challenges, some traders remain hopeful for a potential year-end rebound if macroeconomic conditions improve.
Selling pressure accelerated a decline that has dragged down Bitcoin and the broader crypto market since early October.
The Bitcoin and cryptocurrency market stumbled again at the start of the global trading week, deepening a correction that has stretched over several sessions and wiped out nearly $1 billion in leveraged positions in just a single day.
Selling pressure intensified a drop that has weighed on Bitcoin and other digital assets since early October, when more than $19 billion in forced margin-related sales kicked off the downturn.
Bitcoin fell as much as 8%, touching $83,824 in New York before recovering to current levels. With this move, the cumulative decline from early October’s highs neared 30%. Ether, the second-largest cryptocurrency, performed even worse: it slid up to 10%, to $2,719, leaving it down 36% in seven weeks.
Bitcoin’s slump spills over to the rest of the crypto market
The impact was even more severe among small-cap, low-liquidity tokens—favorites of traders seeking sharp upside swings. A MarketVector index tracking the lower half of the top 100 digital assets has plunged nearly 70% so far this year.
Market dynamics remain dominated by so-called “liquidation cascades,” which occur when prices fall through thresholds that trigger the automatic closing of leveraged positions.
The October 10 episode—just days after Bitcoin hit $126,251—still reverberates in an ecosystem where visibility into true leverage levels is limited, as exchanges do not fully disclose data.
The downturn also coincides with a more fragile global environment. U.S. equities started the week lower, the yen strengthened, and the Bank of Japan signaled a possible imminent rate hike. Against this backdrop, attention is shifting to the Federal Reserve’s policy path and the signals that could shape expectations for 2026.
A challenging backdrop
Adding to the tension is the situation at Strategy, Michael Saylor’s company, which set aside $1.4 billion to cover dividend and interest payments in an effort to ease concerns about potential Bitcoin sales from its massive holdings. Its shares fell more than 10% on Monday and are now down roughly 66% from their 2024 peak.
Meanwhile, U.S. spot Bitcoin ETFs drew only $70 million in inflows over the past week, following about $4.6 billion in outflows the previous month—reflecting still-weak investor appetite.
Even so, some traders believe there may be room for a year-end rebound, provided macroeconomic data ease pressure on interest-rate expectations.
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