Daily crypto liquidations nearly triple amid overheating leverage: Glassnode

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.

Related: $19B crypto market crash: Was it leverage, China tariffs or both?

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.

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

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.