Crypto Liquidations Flare Back Up as Volatility Returns
Grace Miller
October 24, 2025
“We’re still in purge-and-rebuild mode—every macro headline shakes out overstretched longs,” said QCP Capital in a client note.
Two Liquidation Spikes
Derivatives tracker Coinglass recorded $528 million in liquidations over a 24-hour stretch midweek, followed by another $208 million into Friday morning. The first wave hit as traders reacted to fresh inflation data and repositioned ahead of Federal Reserve commentary, while the second spike coincided with a choppy recovery in spot bitcoin above $110,000.
Both bursts skewed toward long positions, with bitcoin and ether accounting for more than half of the notional wiped out. Altcoin perps on Solana, XRP, and meme tokens made up the remainder, underscoring how quickly risk appetite can evaporate after outsized rallies.
Leverage Reset in Motion
Funding rates across major venues flipped negative after Tuesday’s shakeout, encouraging arbitrage desks to step in but signaling reduced speculative leverage. Open interest on Binance and OKX futures fell by roughly 7% week-on-week, while CME bitcoin futures saw a modest uptick as traditional funds added hedges.
Options market makers noted heavier demand for short-dated puts, with one-week implied volatility in bitcoin jumping back above 70%. The bid for protection indicates traders expect more turbulence even as price grinds higher.
Macro and ETF Drivers
Market participants pointed to the tug-of-war between macro data and ETF flows. Softer CPI prints initially fueled risk appetite, but mixed economic releases and geopolitical headlines kept sentiment fragile. Meanwhile, spot bitcoin ETFs flipped from outflows early in the week to late-week inflows, amplifying price swings as authorized participants rebalanced hedges.
Traders also flagged the looming Federal Reserve meeting and a dense calendar of corporate earnings as catalysts for further volatility. Many desks are lightening leverage ahead of those events, preferring to add exposure once direction becomes clearer.
What the Metrics Show
Beyond liquidations, analytics dashboards show perpetual swap basis narrowing toward neutral, indicating an end to the extreme contango seen earlier in October. Exchange reserves ticked higher as traders moved coins back on-platform to fund margin accounts, while stablecoin issuance remained flat.
Analysts say the data points to a market still digesting the Oct. 10 crash, with lingering caution preventing a full-throttle recovery. That may set the stage for more orderly rallies if buyers return gradually.
Risk Cues for Next Week
Traders are watching the Fed’s preferred inflation gauges, ETF flow reports, and tech earnings for clues on whether volatility will remain elevated. Desk strategists recommend monitoring cumulative liquidation heatmaps: if long-side wipeouts continue to decline, leverage could rebuild into November. Conversely, another macro surprise could trigger a third wave of forced selling.
For now, risk managers advise trimming highly levered bets and using options collars to navigate the chop. With crypto markets still digesting post-shock volatility, nimble positioning remains the order of the day.