In the past two weeks, under a market structure characterized by high leverage stacking, both long and short positions in the crypto market were significantly "squeezed out": as of August 30, 2026, the cumulative liquidation scale has exceeded $9.71 billion, with short positions passively closed amounting to approximately $6.55 billion and long positions facing forced liquidation of about $3.16 billion, reflecting that price volatility far exceeded the risk assumptions of leveraged users. Meanwhile, during this intense deleveraging phase, Alternative.me’s Fear and Greed Index remained at 69 in the "Greed" zone, indicating that nominal "risk events" did not suppress overall risk appetite; instead, the combination of high leverage and optimistic sentiment amplified the volatility in both the on-chain and contract markets. On a micro level, the Ethena Foundation ended its monthly unlock for original and VC investors starting October 5, and repurchased some of the locked ENA from large seed investors through OTC, while planning to allocate 95% of net income to repurchase ENA after USDe supply reaches a specific milestone, attempting to reshape the token supply-demand and selling pressure structure by altering the unlock and repurchase mechanisms. On a macro level, Iran and Oman reached an understanding regarding the navigation arrangements in the Strait of Hormuz, which will not be automatically executed, meaning this critical energy passage remains subjected to US-Iran interactions, making it difficult to completely dissipate the energy transport risk premium. The massive liquidation releasing leverage pressure, adjustments in Ethena's token economy, and the uncertainties in the Strait of Hormuz together constitute the core variables impacting the risk appetite, capital flow, and trading structure for BTC, ETH, and high-risk on-chain assets at this stage. This article will analyze how these variables reshape the risk appetite and capital flow for BTC, ETH, and high beta on-chain assets.

Longs and shorts blow up together: $9.7 billion liquidation exposes high leverage

In the past two weeks, the total liquidation in the crypto derivatives market exceeded $9.71 billion, with short liquidations around $6.55 billion and long liquidations approximately $3.16 billion, indicating that the scale of short liquidations is nearly double that of longs. Liquidations simultaneously covered both sides, qualitatively eliminating the possibility of unilateral trend踩踏, appearing more like a situation in a high-leverage, high-volatility environment, where every relatively limited price fluctuation at different times triggered a chain liquidation in both long and short directions. Since BTC, ETH, and others are the primary assets for leveraged derivatives trading, such chain liquidations naturally concentrated on these mainstream assets, amplifying the intense volatility and "spike" market within a short period.

From the perspective of macro leverage variables, the concentrated blowout of both longs and shorts means that the high-level leverage in the derivatives market has been temporarily squeezed out, leading to a passive reduction of the systemic leverage level in the short term. Risk positions were liquidated into spot or cash-like assets. For on-chain funds, some chips originally allocated to high-leverage contracts were forced to flow back to lower leverage or even no-leverage positions, directly compressing overall risk appetite. This passive deleveraging not only reduces the probability of systemic踩踏 occurring in the short term, but also reserves space for the next round of leverage reconstruction and another significant volatility on a lower leverage base, becoming a key background that needs to be closely monitored for subsequent BTC and ETH volatility structures.

Greed index at 69: Emotion not scared off by liquidations

Coinciding with the over $9.71 billion of dual-direction liquidation in the past two weeks, the Fear and Greed Index provided by Alternative.me remained at 69, corresponding to a "greed state." In other words, even after approximately $6.55 billion in shorts and around $3.16 billion in longs were concentratedly blown up, overall sentiment did not switch from "high-risk appetite" to risk aversion; instead, it formed a combination of "high volatility + high greed." Such sentiment readings are widely tracked by the market as references for overheating/overcooling. When significant liquidations and high levels of greed coexist, it more resembles a brief cooling period under passive deleveraging, rather than a trend-based risk appetite retreat.

The direct implication of sentiment not significantly cooling down is that after the leverage base is compressed, new leverage is likely to rebuild itself in a short time, thereby raising the conditional probability of large-scale liquidations appearing again in the future. In this environment, BTC and ETH are more likely to form a "high volatility + frequent false breakouts" consolidation structure: contract funding rates and futures discounts switch back and forth within a high and returning neutral range, reflecting emotions and positions constantly testing their upper limits. For on-chain and over-the-counter funds, on one side is the recently recorded level of $9.71 billion in liquidations, while on the other is the sustained greed indicated by the index, making the combination trading structure of "short-term speculation, capturing segments + medium-term defensive maintenance, controlling leverage" more attractive. This is also a key emotional variable for judging whether BTC and ETH volatility will evolve into a new round of deleveraging cycles.

Ethena halts unlocks: 95% of income for ENA repurchases

In an environment where leverage is repeatedly squeezed, the Ethena Foundation has chosen to directly adjust its structure: starting October 5, it has ended the monthly unlock arrangement for original investors and will no longer continue with the periodic unlock for VC investors, while repurchasing some of the remaining locked ENA from large seed round investors through over-the-counter transactions, and has decided to terminate the remaining vesting with major investors in advance. This is equivalent to buying back a portion of future supply through OTC outside the secondary market, compressing the originally predictable unlock selling pressure into a one-time, protocol-led chip redistribution. For the risk pricing of ENA, the future supply curve becomes smoother, the uncertainty of the unlocking schedule decreases, theoretically lowering risk premium demands and raising the upper price range, making it easier to attract funds willing to bear Beta even after the $9.71 billion liquidation, shifting from purely short-term leveraged trading to a medium-term allocation narrative of "structural optimization + supply contraction."

More aggressively, the redesign on the income side: Ethena plans to allocate 95% of net income to repurchasing ENA after USDe supply reaches a certain milestone, directly linking the protocol's cash flow with token demand. From a macro perspective, this is equivalent to partially transforming the constant "selling pressure" (early unlocks + team sell-off expectations) into "buying pressure" that increases with the scaling of the protocol, providing ENA with a quantifiable repurchase bottom line during significant market volatility. For capital structure, this gives high-risk appetite funds a reason to switch from non-cash flowing narrative tokens to "revenue-supported + repurchase mechanism" assets: by bearing similar Alt volatility, they can reduce leverage multiples on-chain or off-chain, using repurchase assets like ENA to take on risk exposures. If this model is replicated by more protocols, some systemic leverage may transition from purely narrative tokens to income-repurchase type targets, leading to a reshuffling of capital distribution, volatility peaks, and drawdown rhythms within the Alt sector. The key moving forward will be when USDe supply triggers the 95% repurchase mechanism and whether the market is willing to pay a lower risk discount for such quasi-equity structures.

Strait of Hormuz not fully restarted: Oil price risk ahead

Iran's Deputy Foreign Minister Galibaf confirmed that Iran has reached an understanding with Oman regarding the navigation arrangements in the Strait of Hormuz, but this understanding will not automatically enter into execution, which will only take effect if the United States fulfills its obligations. He also emphasized that Iran is "not in a hurry" to reopen the Strait of Hormuz. The Strait of Hormuz is a crucial global energy transport corridor, and its navigation status has traditionally been directly embedded in oil price risk premium models. Now, being in a state between "not fully closed" and "not truly restarted," it makes it difficult for the market to push energy risk premiums back to normal ranges, creating a possibility that inflation expectations and interest rate paths might be forced to rise again.

For crypto assets, this ongoing unresolved geopolitical variable transmits through oil prices and inflation expectations to interest rate pricing, compressing the valuation space for risk assets like BTC and ETH from the discount rate level. On the other hand, in a high leverage environment with a sentiment leaning towards "greed," any headlines such as "deteriorating Hormuz situation" or "oil price jump" could resonate with fragile positions, replicating the dual-direction liquidation scene of $9.71 billion from the past two weeks, causing the crypto market to undergo a severe deleveraging and a rapid switch in risk appetite triggered by geopolitical risk before the macro situation truly deteriorates.

From blowouts to repurchases: Bet direction for the next round of volatility

The dual-direction liquidation of $9.71 billion over the past two weeks (including approximately $6.55 billion in shorts and about $3.16 billion in longs) proves the core contradictions of the current structure: the vulnerabilities of high leverage have been exposed, yet Alternative.me’s Fear and Greed Index remains in the 69 "greed" zone, indicating that risk appetite has not genuinely cooled, and the leverage cycle in the derivatives market may quickly rebuild after funds slightly restore confidence. In contrast, Ethena has chosen to end the monthly unlock for original and VC investors starting October 5, to repurchase a portion of locked ENA from large seed investors via OTC, and after USDe supply reaches a milestone, allocate 95% of net income to repurchase ENA. This is equivalent to rewriting the previously linear "unlock selling pressure curve" into a "demand curve" linked to protocol revenue, building a cash flow anchor point for revenue-type tokens that could attract some risk appetite funds originally stuck in purely speculative contracts to migrate towards tokens with yield expectations. At a higher macro level, the understanding reached between Iran and Oman on the Strait of Hormuz navigation, which will not automatically take effect, along with Iran's "no hurry to reopen" this key energy corridor, adds a risk tail to oil prices and inflation expectations that is difficult to price, forcing crypto assets to oscillate between the narratives of "digital gold" against inflation and the role of high beta risk assets. Moving forward, it is crucial to closely monitor three lines: first, the recovery speed of open interest and margin levels on futures and perpetual contracts, determining whether a new round of $9.71 billion level liquidations will occur; second, whether the pace of Ethena's repurchases and unlock adjustments will be fulfilled, providing a template for "revenue-supported tokens" to form a replicable paradigm; third, how subsequent news regarding the Strait of Hormuz influences global risk appetite and energy pricing. Under these overlapping variables, BTC and ETH will continue to serve as concentrated reflections of macro shocks, leverage rebuilding, and token structural innovations, becoming the core trading and hedging vehicles in the next round of volatility for capital.

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