This week, in the East 8 Time Zone, the cryptocurrency market experienced one of the most severe single-day corrections since the FTX collapse, with mainstream coins like BTC, ETH, and BNB collectively plummeting, and the derivatives market saw a dramatic increase in liquidations. Bitcoin's intraday maximum drop reached 15.48%, briefly falling to $61,156.3, while ETH temporarily dipped below $1,800, and BNB fell below the 600 USDT mark. The total liquidation scale across the market was estimated by various parties to be in the range of $1-2 billion. Against this backdrop, the BTC spot ETF IBIT recorded approximately $10 billion in single-day trading volume, presenting a paradox of massive volume alongside a steep price drop, indicating that the dynamics of leverage and institutional selling pressure are reshaping the market power structure.
Bitcoin's 15% Sharp Drop: Systemic Correction at FTX Shadow Level
● Price Path and Synchronized Weakness: This round of Bitcoin saw a maximum intraday drop of about 15.48%, with a low piercing down to $61,156.3, as it continuously released long shadows from high positions, erasing several days of gains in just one day. Meanwhile, Ethereum's 24-hour drop fluctuated between 8.23%-16.19%, and it temporarily fell below the critical $1,800 mark, while BNB's price also dropped below 600 USDT. The simultaneous amplification of declines across multiple assets within the same trading window indicates that this is not an isolated bearish event for a single coin, but rather a typical release of systemic risk.
● Clearing of Leverage Rather Than Single Point Bearishness: Multiple data sources indicate that the liquidation scale in the derivatives market over the past 24 hours was approximately $1-2 billion, with high-leverage long positions concentrated in previous high ranges. As spot and contract prices rapidly declined, margin pressures led to mass liquidations. The chain of price drop—insufficient margin—passive selling—further decline operated at high frequency, making this market movement resemble a broad-spectrum leverage clearing rather than a structural collapse triggered by a single bearish fundamental.
● Clustered Liquidations and Amplified Volatility: Monitoring accounts show that the “ETH liquidation zone is concentrated between $1,574-$1,681,” forming a typical liquidation dense zone and price clustering effect. When the market price fell below these ranges, a large number of long contracts were triggered simultaneously at similar price levels, causing resonance between on-chain and derivatives price ranges, leading to instantaneous selling pressure far exceeding normal selling rhythms, amplifying the speed and amplitude of the entire correction wave.
Massive ETF Trading Volume Cannot Stop the Downtrend
● Trading Volume Surges but Prices Plummet: On the spot side, Bitcoin spot ETF IBIT recorded a single-day trading volume of approximately $10 billion, setting a historical record for volume. However, on the same trading day, Bitcoin's price recorded a drop of about 13%, with the massive ETF volume and the price plunge occurring in parallel. This combination appears more like a signal of intense turnover of funds within the ETF channel rather than a simple, one-sided net inflow into the market.
● High Volume Does Not Equal "Someone Supporting the Price": Theoretically, a surge in volume during a price drop indicates that both buyers and sellers are highly active, but the rapid price decline suggests that the selling side holds an advantage at the margin. Possible scenarios include: some institutions or large holders are using the ETF for offsetting trades, with short-term funds viewing the ETF as a more efficient exit channel, compounded by the reluctance of potential buyers to significantly raise prices in a declining market. The result is that the increased trading volume reflects rapid turnover of chips rather than a sufficiently strong willingness to "support the price at low levels."
● Data Gaps and Interpretation Boundaries: Currently, there is a lack of precise net inflow and outflow data for the US BTC ETF at the official level, and this IBIT $10 billion transaction can only be seen as evidence of "intense capital competition," rather than a clear buy or sell signal. In this environment of data asymmetry, forcibly interpreting high trading volume as a one-sided bullish or bearish signal underestimates the complex hedging and cross-market repositioning behaviors behind it.
Institutional Selling Pressure Emerges: Confrontation Between WLFI and Leveraged Longs
● Demonstrative Effect of WLFI's Selling Actions: On-chain data shows that the World Liberty Finance team sold approximately 173 WBTC during this round of decline. In absolute terms, this does not constitute decisive selling pressure relative to BTC's overall market value, but the label of "institutional team actively reducing positions" often has a demonstrative effect on sentiment. For participants highly focused on the movements of large on-chain addresses, such actions may be interpreted as a signal of a temporary cooling of risk appetite.
● Institutional Reductions and High-Leverage Longs Collide: Tracking entities, including Trend Research, indicate that some leveraged addresses and high-leverage long entities like 7 Siblings continued to increase their long positions before and after the market started moving. On one side, institutional funds chose to orderly reduce positions and lock in profits during high volatility and deep corrections; on the other side, leveraged longs betting on trend continuation were passively hit, creating a structural imbalance between long and short positions that underlies this sharp decline.
● Trading Behavior Amplifies One-Sided Movement: From a behavioral finance perspective, institutions tend to execute reduction plans during phases of extreme liquidity and heightened panic to minimize price impact costs; meanwhile, high-leverage longs are most vulnerable during periods of sharply amplified volatility, facing insufficient margin and forced liquidations once the market reverses quickly. The result is that active reductions and passive liquidations overlap in the same direction, causing prices to exhibit a nearly "free-fall" one-sided movement in a short time.
Liquidation Chain Reaction: From Hot Zones to Emotional Avalanche
● Liquidation Dense Zones Trigger "Snowball Effect": Around the key zone of “ETH liquidation dense area $1,574-$1,681,” a clear chain reaction mechanism of "liquidation driving liquidation" can be observed. When prices slide from high levels and touch these highly concentrated margin areas, the first batch of leveraged longs being liquidated brings additional selling pressure, pushing prices further down to breach more liquidation prices, subsequently triggering the second and third batches of liquidations. Technically, this is a typical snowball-style deleveraging under the imbalance of price and margin structure.
● Concentrated Positions and Amplified Declines: Not only ETH, but also BTC and other mainstream coins' contract positions have formed high-density clusters at certain price levels, roughly overlapping with the liquidation "hot zones." When the market shifts from oscillation to one-sided decline, these concentrated position areas become "acceleration zones" for the downtrend, releasing a large number of passive sell orders at once, making this single-day adjustment's speed and amplitude approach the severity seen during the FTX collapse. Such structural amplification effects indicate that the market movement is driven by leverage and position distribution issues, rather than simply the beginning or end of a trend reversal.
● Emotional Feedback and Behavioral Repricing: The impact of liquidation waves and extreme volatility on market sentiment exhibits clear nonlinear characteristics. In the short term, the fear index often rises, with off-market funds increasing their wait-and-see weight, and trend traders actively reducing leverage and positions. In the longer term, each severe deleveraging event prompts the market to reassess the costs and benefits of high-leverage speculation, with the "risk premium" of high-volatility assets being recalibrated, thereby imposing deep constraints on leverage usage habits and risk management frameworks in the next round of bull-bear transitions.
Under the Shadow of FTX: What This Correction Means
● Similar Drop Range but Different Triggers: In terms of single-day drop ranges, Bitcoin's maximum 15.48% sharp decline is approaching the extreme daily drop levels seen during the FTX collapse, making it easy to evoke associations with a "black swan-style collapse" on visual and emotional levels. However, the triggers for the two events are fundamentally different: the FTX phase was centered around the collapse of platform credit and systemic counterparty risk, while the current correction is more rooted in the imbalance of leverage and position structure following a continuous market trend, occurring in the absence of a black swan credit event.
● A Mixed Version of the Later Stage of the Last Bull Market: Combining the on-chain data showing the activity of institutional-level position adjustments, this round of correction is more akin to a mixed version of "high leverage + institutional repositioning" seen in the later stages of the last bull market. On one hand, institutions utilized ETFs and spot channels to rebalance positions during high volatility; on the other hand, retail and some professional funds amplified their optimistic bets on the market through high leverage, leading to concentrated liquidations when prices reversed. Overall, there are currently no core signs of a systemic credit crisis, but rather a forced reallocation of previously overcrowded positions.
● Risks and Opportunities Under Historical Comparisons: Looking back at history, whenever there is a single-day drop approaching "FTX levels," it is often accompanied by two major subsequent characteristics: first, medium to short-term volatility significantly increases, with prices oscillating within a wider range to test the endurance of both bulls and bears; second, the position structure undergoes a deep reset, raising the threshold for trend continuation or reversal after high-leverage funds are washed out. For participants, this means that short-term operational risks are rising, but it also increases the likelihood of obtaining a healthier trend starting point in the medium to long term.
The Battlefield After Leverage Liquidation: Who is Waiting for the Next Signal
This round of correction can be summarized as the result of the resonance between the concentrated liquidation of high-leverage longs and the orderly reduction of positions by institutions, with the $10 billion trading volume on the ETF side reflecting intense competition among existing funds across different channels, rather than a simple story of one-sided "bottom fishing" or "dumping." The large number of passive liquidations and active repositioning overlapping within the same time window has caused price movements to far exceed the severity of a typical correction.
In the short term, the market still needs time to digest the aftermath of liquidations and emotional trauma, with implied volatility likely remaining at high levels, and trend signals will appear ambiguous until the leverage ratio declines and institutional positions stabilize. For most traders, forcibly trying to capture extremely short-term reversals in a high-volatility environment presents an unfavorable risk-reward ratio; a more rational path is to wait for structural signals rather than chasing every "knife-edge rebound."
Moving forward, three types of data are worth closely monitoring: first, the net inflow and outflow of funds officially published by the ETF, to determine whether traditional funds are positioning for the dip or withdrawing temporarily; second, the changes in holdings of large on-chain addresses and institutional marked addresses, to observe whether there is sustained accumulation or reduction; third, the overall leverage ratio in the derivatives market and changes in long and short position structures, using data rather than emotions to answer a key question—whether this round of sharp decline is a severe continuation within a bull market or a prelude to a larger trend reversal.
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