This week, in the East 8 Time Zone, the price of Bitcoin briefly fell below $83,000 (according to a single source), triggering a chain liquidation of leveraged long positions, with approximately $1.7 billion in passive liquidations across the market within 24 hours (according to a single source), marking a key turning point in this round of market activity. At the same time, multiple assets such as BTC, ETH, SOL, and tokenized silver futures faced pressure, leading to a concentrated clearing of leveraged positions in the futures and options markets. On the surface, this was a rapid pullback, but the underlying contradiction was the previously accumulated excessive leverage and a sudden shift in sentiment that led to a collapse in risk appetite. The following sections will analyze the deep logic behind this leverage washout from three perspectives: liquidation structure, derivatives data, and whale reallocation.
Liquidation Structure and Price Cascade
● Liquidation Structure Breakdown: According to a single source, the approximately $1.7 billion in liquidations over 24 hours was mainly concentrated in high-leverage assets such as BTC, ETH, SOL, and tokenized silver futures, characterized by concentrated liquidations of long positions in mainstream cryptocurrencies and some long-term trend longs being passively exited. Since public data does not provide a detailed breakdown by contract or asset, it can only be confirmed that this was a large-scale liquidation across multiple assets, rather than a technical adjustment limited to a single asset.
● Price Cascade Effect: BTC's rapid drop below $83,000 (according to a single source) at this critical support level quickly consumed the margin safety net of high-leverage longs, triggering a chain liquidation that further amplified market slippage. A large volume of passive sell orders surged, causing the futures market to be instantly drained, with spot and contract prices simultaneously under pressure, forming a typical feedback loop of "price breakdown—insufficient margin—passive liquidation—further price decline."
● Comparison with Previous Pullbacks: In terms of scale, this round of liquidations, at several billion dollars, has clearly exceeded the typical liquidation volume during regular daily fluctuations, but has not reached the extreme panic peak levels of historical days. Coupled with the characteristic of liquidations being concentrated in a single trading day, followed by a stabilization in prices, it resembles a rapid deleveraging targeting high-leverage positions rather than a super blowout event before a long-term trend reversal.
● Unverified High-Frequency Data: There are claims in the market that the scale of long liquidations during this round may be in the range of $380 million to $778 million, but this data remains unverified information and lacks cross-validation from multiple sources. Therefore, when assessing the level of the market, it can only serve as a risk reminder and should not be used as an exact conclusion to avoid misinterpreting the range estimate as a definitive fact.
Derivatives Signals Indicating Defensive Stance
● Futures Leverage Downgrade: According to data sources like techflow, Bitcoin futures open interest has shrunk to about $46 billion, showing a significant decline from previous highs, indicating that both bulls and bears are beginning to reduce their exposure in total leverage. This change does not only imply passive liquidation of longs but also suggests that bears are choosing to take partial profits or reduce positions amid significant price volatility, indicating that the overall leverage "volume" in the derivatives market is being downgraded.
● Options Skew Shifts to Hedging: Also from data sources like techflow, the delta skew of Bitcoin options has risen to about 17%, indicating that the premiums for put protection have relatively increased, with a significant rise in market demand for hedging against downside risks. Investors are more willing to pay extra premiums for buying put options, shifting sentiment from "mindlessly leveraging long" to a defensive state of "hedging positions with options."
● Emotional Turning Point in Leverage Structure: Combining the reduction in futures open interest with the rising options skew, this round of adjustment is not only a sharp price fluctuation but also a repricing of market leverage structure and risk appetite: total leverage contraction + increased put protection indicates a shift in funds from an aggressive offensive mode to a focus on protecting capital and controlling drawdowns, with active management of positions taking precedence over seeking extreme returns.
● Limitations of ETF Data: Currently, public channels lack complete and consistent fund flow data regarding related ETFs, making it difficult to accurately depict allocation and redemption rhythms at the fund level. Therefore, this article can only discuss changes in leverage attitudes based on futures and options data, without extending to the intraday fund inflow and outflow paths of specific ETF products.
Whale Reallocation and Emotional Contrast
● Three Reallocation Routes: The market has tracked a whale that has held ETH for 4 years and switched to WBTC, which has undergone three large-scale asset switches over the past few years. The first two switches achieved returns of approximately 6.45% and 9.26% by switching from ETH to other assets, while this round involved buying WBTC at an average price of about $82,494.79, partially converting long-held ETH positions into positions linked to BTC, continuing its consistent style of "switching at nodes."
● From Bottom Fishing to Being Trapped: Comparing this purchase average of about $82,494.79 with BTC's subsequent brief drop below $83,000 (according to a single source), it can be seen that this whale, which had previously "timed the market well," did not gain immediate floating profits this time but instead found itself in a floating loss during this round of intense washout. The market narrative shifted from "precise bottom fishing" to "being trapped at high levels," amplifying retail investors' sensitivity to top risks.
● Motivation for Switching ETH to WBTC: Based on public information, it can only be speculated that this whale switched from a long ETH position to WBTC based on two judgments: first, a belief that BTC's relative performance is superior at this stage, and second, after accumulating paper profits in ETH, choosing to partially cash out and shift to Bitcoin, which is viewed as a more "main asset." However, it must be emphasized that current data cannot support any inference regarding the source of funds, team background, or any account associations with other large holders.
● Whale Reallocation and Leverage Washout: In a high-leverage environment, such large spot or low-leverage reallocations are often over-interpreted by the market as "top signals," further amplifying panic sentiment. When prices retract slightly, leveraged longs accelerate liquidations out of concern for "whales fleeing," which in turn reinforces the downward trend, causing what was originally a neutral position adjustment to be swept into the chain of leverage and emotional cascade.
Reflexive Lessons from ETH Whale Long Positions
● Scale of Floating Losses: According to a single source, accounts marked as "BTC OG insider whales" and a large account with "$230 million in long positions" have heavily invested in ETH long positions during this round of volatility, with current floating losses of approximately $100 million and $120 million, respectively. These data come from a single on-chain monitoring channel and, while valuable for reference, should be viewed as individual samples rather than market-wide representations.
● Backlash of Trend Leverage: The aforementioned accounts had previously gained considerable profits by leveraging in line with market trends, but this round saw them continue to add leverage during a phase of extreme sentiment and significant price deviation from the mean, leading to passive involvement in the liquidation chain during the pullback. Their transition from "trend winners" to "passively deeply trapped" is a typical case of market reflexivity: the more successful a leverage model, the more likely it is to be replicated to extremes at emotional peaks, thereby amplifying losses in the opposite direction.
● Insights on Leverage Style: In terms of position direction, these whales, like retail investors, chose a relatively homogeneous ETH long; in terms of leverage style and floating loss ratio, even with size and information advantages, it is difficult to precisely time entries during high volatility phases. For ordinary investors, the reality that "even whales can be backfired by high volatility" reveals more intuitively than any risk warning that the size of leverage does not correlate with risk tolerance.
● Independent Risk Samples: It is important to clarify that there is currently no reliable evidence indicating that these whale accounts have any financial or identity connections, nor can they be simply categorized as a unified trading group. They represent multiple independent large capital individual risk samples in this round of market activity, all swept up in the same wave of deleveraging under the same market sentiment and price volatility backdrop.
Spillover Effects of Cross-Asset Liquidations
● Silver Futures "Caught in the Crossfire": In this round of turmoil, tokenized silver futures unexpectedly became one of the largest liquidation assets, rarely surpassing some mainstream cryptocurrencies. This indicates that leverage risk is no longer concentrated solely in core assets like BTC and ETH; once the prices of main assets experience significant volatility, tokenized precious metal contracts, previously viewed as "relatively marginal," can also be swept into the wave of passive liquidations.
● Joint Liability Under Major Asset Narratives: Some funds previously established leveraged positions in tokenized precious metal futures based on the narrative of "rotation of major assets" and inflation hedging, achieving portfolio diversification during the Bitcoin surge. However, as Bitcoin's volatility increased and margin coverage pressures surged, these seemingly risk-diversifying positions were forced to deleverage synchronously due to sharing margin pools and risk parameters with crypto assets, resulting in a "precious metals being hit alongside Bitcoin" joint liability phenomenon.
● Side Signal from UNI Whale: Additionally, on-chain monitoring revealed that a UNI whale transferred approximately 2.493 million UNI to Binance during the same period, equivalent to about $10.62 million at the time. This action can be seen as a side signal that some funds may be preparing to cash out or participate in swing trading, but in terms of scale and influence, it is still far from dominating this round of leverage washout and can only be regarded as a local sample of marginal changes in market liquidity.
● Reminder of Combinatorial Risks: The phenomenon of cross-asset liquidations once again reminds the market that contract risks are essentially combinatorial: when the main asset triggers large-scale liquidations, margin usage and risk parameter adjustments will transmit outward along the correlations of contract types, underlying assets, and fund account structures, ultimately affecting assets that were originally considered "not closely related to BTC." For traders using multi-asset and multi-strategy combinations, a risk misstep in a single asset can quickly evolve into a systemic drawdown at the portfolio level.
Market Rhythm After the Leverage Retreat
● Nature of This Round of Washout: Considering BTC's brief drop below $83,000 (according to a single source) and the approximately $1.7 billion in liquidations, this event can be viewed as a typical high-leverage washout—price volatility was the trigger, but the core issue was the severe amplification of a moderate pullback after the previous leverage levels were pushed high. Compared to daily noise-like pullbacks, this round resembles a concentrated correction of the habit of "treating profits as margin."
● Leverage Temperature and Rising Hedging: The reduction of futures open interest to about $46 billion and the rise of options delta skew to about 17% (both according to techflow) jointly signify a clear downgrade in short-term leverage temperature and a rapid rise in hedging demand. In the upcoming market phase, funds are more likely to make fine adjustments around leverage multiples and position structures rather than continue to seek "the last segment of gains" based on extreme leverage.
● Framework for Subsequent Trends: In this round of adjustment, both whales and highly leveraged retail investors faced pressure or even deep traps at high levels, significantly suppressing the willingness to add aggressive longs in the short term. If no new, definitive macro-negative news materializes, the more probable scenario is that the market enters a phase dominated by oscillation and redistribution of chips, rather than immediately starting a new round of unilateral surges or crashes. This framework reflects caution after the leverage retreat while preserving elastic space for medium- to long-term trends.
● Information Boundaries and Risk Warnings: It is important to reiterate that the sensitive data regarding liquidation scale, whale floating losses, etc., mentioned in this article, which are based on single sources or unverified ranges, have been clearly marked in the text; regarding the specific macro triggers for this round of pullback, ETF fund flows, and government policy impacts, due to the lack of direct and complete evidence chains, this article deliberately avoids any specific and unverified inferences, only using vague expressions such as "macro factors controversy pending verification" to point out the limitations. Readers should fully understand this inherent limitation when adjusting their strategies based on this information.
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