The crypto market is reeling after a wave of forced liquidations wiped out $1.4 billion in leveraged positions within 24 hours, according to data from CoinGlass. Bitcoin alone accounted for $391 million in long liquidations and $20.2 million in short positions, reflecting an overwhelming bias toward bullish bets that unraveled as prices tumbled.
Bitcoin Hits Its Lowest Level Since June
Bitcoin extended its decline early Tuesday, plunging to its lowest price since June, as global risk appetite waned amid ETF outflows, geopolitical tensions, and the steady selling of digital-asset treasuries.
The Bitcoin Fear and Greed Index slipped to 21, marking “extreme fear” territory.
From its October peak, BTC now trades 17% lower, making this its worst start to November since 2018, according to Timothy Misir, Head of Research at Blockhead Research Network.
Over-Leverage Unwinds: $391 Million in Longs Liquidated
The scale of Bitcoin’s liquidations highlights the risks associated with excessive leverage across derivatives markets. Roughly nineteen times more long positions were liquidated than shorts, as traders betting on a price rise were forced out when Bitcoin broke key support levels.
Liquidations occur when margin calls automatically close losing trades — effectively transferring wealth from over-leveraged traders to liquidity providers, market makers, and counterparties holding the opposite side of the bet.
The cascade of forced selling creates short-term price pressure and often acts as a reset button for overheated markets.
Where the Money Flows After the Crash
- From Leveraged Traders to Liquidity Providers
- Most of the $391 million lost on long positions flowed to exchanges, market makers, and hedge desks managing the short side of the trade. These players often profit from market volatility by taking the opposite position to that of retail traders.
- From Weak Hands to Stronger Accumulators
- When over-leveraged traders are wiped out, long-term investors often step in to fill the void. Institutional buyers and spot holders view these dips as entry opportunities — absorbing coins sold during panic liquidations. This rotation from weak hands to strong hands can help stabilize markets once the leverage purge is complete.
- Into Hedged and Defensive Positions
- Some capital shifts into more conservative strategies — options, ETFs, or delta-neutral positions — to hedge against further downside. Funding rates across major exchanges have turned neutral to negative, indicating traders are reducing leverage and risk exposure.
- Stablecoin Parking and Capital Preservation
- A portion of liquidated funds tends to flow into stablecoins (USDC, USDT, RLUSD) or fiat on exchanges as traders wait for volatility to subside. This temporary flight to stability often precedes the next re-entry wave once sentiment improves.
The Sentiment Reset: Extreme Fear, Hidden Opportunity
Maja Vujinovic, CEO of FG Nexus, described the current phase as a crucial inflection point:
“Too many traders were using borrowed money to bet on prices going up. The next few days matter — if bitcoin can stay above $100,000–$105,000, it might simply be a healthy reset. If not, we could see a deeper drop.”
While fear dominates headlines, seasoned investors note that large-scale liquidations often cleanse excess leverage — paving the way for a healthier market recovery.
If Bitcoin stabilizes above key thresholds, analysts expect consolidation to follow, with a gradual reaccumulation. However, failure to maintain those levels could trigger additional liquidations, particularly across altcoins that still carry high leverage ratios.
BitVision Analysis: The Great Leverage Washout
At BitVision.ai, we view this liquidation wave as a macro correction within a bull cycle.
- Leverage is resetting, not collapsing.
- Institutional buyers are quietly absorbing spot BTC while derivatives markets deleverage.
- On-chain data shows stablecoin inflows to exchanges rising, signaling sidelined capital preparing for re-entry.
In essence, the $1.4 billion liquidation represents not an end, but a purge. A necessary storm is clearing the air for the next sustainable move upward.