This week, the Bitcoin futures market experienced a rare large-scale long liquidation, with a significant deleveraging in the derivatives sector, attracting high market attention. According to data from a single source, the long liquidation ratio once reached about 96%–97%, in stark contrast to the past 30-day moving average of about 31%, indicating that long positions were rapidly "wiped out" in a short period. However, after such a significant leverage squeeze, the annualized funding rate for BTC perpetual contracts still maintained a positive range of over 40%, suggesting that the long-short structure remains significantly biased towards long positions. This misalignment of "longs being liquidated while leverage remains high" poses potential risks for further forced liquidations and high volatility in the subsequent market.
Surge in Long Liquidation: From 31% to Extreme One-Sidedness
● Sudden spike in liquidation ratio: According to data from a single source, the long liquidation ratio in this round of Bitcoin futures reached about 96%–97%, while the past 30-day moving average was only about 31%, indicating a sudden shift from a relatively balanced two-way liquidation to an almost entirely one-sided long squeeze. This leap in ratio reflects that risk was concentrated in one direction, collectively triggered in a short time.
● Abnormal intensity and concentration: Compared to common market volatility periods, even in severe downturns, long and short liquidations usually retain a certain proportion of opposite stop-loss and passive reduction. This time, the approximately 96%–97% was almost entirely from one-sided long positions, indicating that leveraged positions exhibited high synchronization when prices broke key support levels, with liquidity being consumed in a very short time, amplifying the downward slope and market panic.
● Resonance squeeze of price and leverage: The scenario of longs being wiped out is essentially a negative feedback loop between price decline and high leverage structure—when prices break important technical levels, it triggers a chain reaction of forced liquidations among highly leveraged longs; the selling pressure from forced liquidations accelerates the price decline, further triggering stop-losses and liquidations at lower levels. The current high leverage prevalence in the derivatives market has led to a concentrated explosion of this "waterfall-style deleveraging" in a short time.
Annualized Funding Rate Over 40%: Deleveraging or Surface Cooling?
● Elevated positive funding rate: Data from a single source shows that the annualized funding rate for BTC perpetual contracts is about over 40%, which is typical of a bullish structure—longs must continuously pay fees to shorts to maintain high leverage and high positions. This level of funding rate indicates that market demand for longs remains strong, or at least structurally still holds an advantage, far from returning to a "neutral" state.
● Why still positive after liquidation: Market voices suggest, "The funding rate remains positive after large-scale liquidations, indicating that long positions have recovered quickly or have not been completely cleared." On one hand, some highly leveraged longs, after being forcibly liquidated, found that price corrections provided "cheaper chips" for new or additional longs, leading to a rapid return of longs; on the other hand, it may also be that existing mid-to-low leveraged longs did not exit the market on a large scale but only suffered floating losses, keeping the overall structure still biased towards longs.
● Impact on subsequent volatility: If the funding rate continues to remain in a high range, it means that the holding costs for longs are continuously rising. Once prices come under pressure again, it is easy to trigger a new round of passive reductions and forced liquidations under the dual squeeze of high costs and high leverage. At the same time, high funding rates will attract some institutions and professional traders to hedge through short positions or risk-free arbitrage, thus forming new focal points of contention at key price levels.
Resonance Window of 91,000 BTC and 435,000 ETH Options Expiration
● Concentrated expiration time window: According to data from a single source, about 91,000 BTC options and 435,000 ETH options are about to expire, making this time window a key node affecting derivatives pricing and volatility. As options positions approach expiration, their Delta and Gamma characteristics undergo drastic changes, directly impacting the hedging demand for spot and futures.
● Hedging behavior and liquidation pressure: Before and after large-scale options expiration, holders often adjust their hedging strategies based on the underlying price position: if prices approach the execution price of a large number of open contracts, sellers may be forced to buy or sell spot and futures for Delta hedging, thereby amplifying buying or selling pressure in a short time. In the context of this round of long liquidation, if the hedging direction overlaps with the direction of forced liquidations, it will further amplify one-sided volatility; conversely, it may also form some hedging support at key price levels, temporarily buffering selling pressure.
● Futures liquidation and Gamma effect overlap: When concentrated long liquidations have occurred in the futures market, if options Gamma is concentrated at nearby price levels, every small fluctuation in the underlying price may be forced to amplify: sellers continuously adjust positions to hedge Gamma risk, creating "passive chasing and cutting" behavior in the market. When forced liquidations in futures and passive trading driven by options Gamma coexist, there is a path risk for both short-term implied volatility and actual volatility to be further elevated.
Not Fully Deleveraged? Different Games Between Institutions and Retail Investors
● Risk exposure of residual leverage: Some opinions bluntly state, "The derivatives market may still not have completed thorough deleveraging, and there remains a risk of further forced liquidations and severe volatility." In an environment where the long liquidation ratio is extremely biased to one side, yet the funding rate remains significantly positive, it is reasonable to infer that some leveraged positions still remain in the market, especially mid-to-low leveraged and structured strategy positions, which may still become a source of new passive selling pressure when the market accelerates again.
● Differences in leverage usage between institutions and retail investors: Institutions typically use combination margin, cross-commodity hedging, and tiered leverage structures, with individual leverage multiples being relatively controllable, emphasizing the smoothing of funding curves and risk budgeting; retail investors, on the other hand, are more likely to concentrate on a single commodity and direction, preferring high leverage and short-term speculation. Once prices turn, the margin buffer space is limited, making it easier to trigger cascading liquidations. Therefore, the same price volatility often has a much higher "destructive power" on retail positions than on institutional positions.
● Strategy differentiation in a high funding rate environment: When the funding rate remains positive, institutions may tend to construct arbitrage structures by shorting high funding rate contracts, buying spot or options for hedging, thus earning funding rates while hedging price risks; some conservative institutions may choose to reduce positions and lower leverage to mitigate tail risks. Retail investors may choose to "bet on a V-shape" to continue adding positions during short-term rebounds or completely exit in panic. It is this behavioral difference that makes subsequent market conditions near key price levels prone to sudden liquidity reductions and amplified volatility.
On-chain and External Signals: Increasing Bitcoin Holdings and Public Chain Chip Games
● Significance of Tron’s increase in holdings: Sun Yuchen publicly stated, "Tron will also increase its Bitcoin holdings in the future," and such statements from large external players and institutional entities provide emotional backing for the mid-to-long-term value of Bitcoin. After severe liquidations and short-term panic, this expectation of increased holdings helps restore some investor confidence, especially for long-term allocation funds, which may be seen as a positive signal for "buying on dips."
● Ethereum Foundation's moderate tightening: In the Ethereum ecosystem, Vitalik Buterin mentioned that the Ethereum Foundation has entered a "moderate tightening period," indicating that the official pace of fund usage and selling pressure will be more restrained. From the perspective of chips and funding structure, this releases a mid-term contraction and stability signal in resource allocation for mainstream public chains: on one side is the institutional tendency to increase Bitcoin holdings, while on the other side is the more cautious pace of fund deployment by the Ethereum Foundation, forming a mid-term guide for future market structure and valuation focus.
● Mismatch of mid-to-long-term factors and short-term liquidation rhythm: It is important to emphasize that whether it is Tron’s statement on increasing Bitcoin holdings or the Ethereum Foundation's adjustment of funding strategies, they mainly affect the mid-to-long-term chip distribution and valuation expectations, and are unlikely to directly change the rhythm of the current liquidation waves. However, they will subtly influence leveraged funds' judgments on future trends, thereby altering participants' position choices and risk preferences in the current high funding rate and high volatility environment.
Is the Calm After Severe Liquidation True Recovery or False Peace?
This round of events in the Bitcoin futures market presents several distinct characteristics: first, the long liquidation ratio once reached about 96%–97%, far exceeding the 30-day average of about 31%, representing an extreme one-sided squeeze; second, after this, the annualized funding rate for BTC perpetual contracts remains at over 40%, showing remarkable resilience in long sentiment and leverage structure; third, with the concentration of external options expiration and the intertwining of on-chain and institutional mid-to-long-term layout signals, the derivatives market likely has not fully cleared leverage. It is important to clarify that the key data such as the total forced liquidation amount across the market in 24 hours and changes in the scale of futures open interest are still pending verification. Without complete data support, it is impossible and inappropriate to make quantitative predictions or directional judgments about specific scales and short-term price trends. Based on the existing data, the only confirmation is that in a phase of high funding rates, where the impact of options expiration has not fully dissipated and residual leverage remains in the market, the market needs to maintain sufficient vigilance against secondary forced liquidations and abnormally high volatility, as any unilateral leverage behavior will face the amplified risk of passive squeezes.
Join our community to discuss and grow stronger together!
Official Telegram community: https://t.me/aicoincn
AiCoin Chinese Twitter: https://x.com/AiCoinzh
OKX Welfare Group: https://aicoin.com/link/chat?cid=l61eM4owQ
Binance Welfare Group: https://aicoin.com/link/chat?cid=ynr7d1P6Z
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
