Explosion of crypto liquidations: Leverage is getting out of control according to Glassnode

Buoyed by the influx of institutional capital, the crypto market seemed to be stabilizing. However, a wave of liquidations on derivative products serves as a reminder of its fragility. According to Glassnode, these liquidations have almost tripled, the result of excessive leverage.

A record purge on the futures markets

October 10, 2025 will go down in history as one of the most violent liquidation episodes of this cycle.

According to the last report of Glassnode and Fasanara, the market was faced with a massive wave of offloading on derivatives products. Analysts describe a rise in leverage that has reached a critical threshold: “Daily liquidations in futures markets have increased from an average of $28 million long and $15 million short in the last cycle, to $68 million long and $45 million short in the current cycle”.

This imbalance peaked during an episode designated by researchers as “Early Black Friday”where more than $640 million per hour was liquidated, rushing bitcoin from $121,000 to $102,000.

Here is the main important facts of this critical day:

• Massive liquidations: more than $640 million/hour liquidated on long positions during the session of October 10;

• A sudden fall in BTC: the jump from $121,000 to $102,000 in a few hours;

• The collapse of open interest: a drop from $49.5 billion to $38.8 billion, a fall of 22% in less than 12 hours;

• An exposure record: total open interest on derivatives reached a peak at $67.9 billion;

• An explosion in volumes: up to $68.9 billion in daily futures trading in mid-October;

• The dominance of perpetual contracts: These represent more than 90% of activity on the futures markets.

This market configuration, characterized by excessive use of leverage, favored a cascading liquidation phenomenon. Momentum kicked in quickly as bitcoin's decline triggered massive margin calls, forcing the automatic closing of many long positions.

New structural dynamics of the market

Beyond the current tensions on derivatives, the Glassnode report reveals a deeper structural change in the market.

Since the launch of spot bitcoin ETFs in early 2024, market dynamics have been profoundly reoriented. “Price discovery has shifted to the spot market”underlines the report, while leverage has been concentrated on the futures markets.

This polarization creates an ecosystem where the reference price is now formed outside of crypto derivatives, but where speculation continues to inject systemic volatility. This shift was made possible by a massive influx of capital into the cash market. Since the 2022 low, more than $732 billion has flowed into bitcoin, bringing its realized capitalization to an all-time high of $1.1 trillion.

In this context, the profile of BTC holders has also evolved. Today, nearly 6.7 million bitcoins are held by institutional entities, including ETFs, corporate balance sheets and decentralized treasuries. Since the start of the year alone, ETFs have absorbed around 1.5 million BTC.

At the same time, balances on centralized exchanges are declining, signaling a long-term conservation strategy rather than tactical use. This new holding architecture, coupled with the fact that the Bitcoin network has processed $6.9 trillion in transfers over the last 90 days, surpassing Visa and Mastercard over the same period, demonstrates a progressive repositioning of bitcoin as a payment rail of institutional scale.

The current dynamic of the crypto market, dominated by leverage and derivatives, calls into question the strength of the rebound. If the price of bitcoin continues to rise, the structure of the market remains fragile. Caution is required, while the balance seems precarious.