Crypto Volatility Persists: $600M Liquidations Shake Year-End Markets

The final weeks of 2025 have been anything but quiet for cryptocurrency traders. Despite the seasonal expectation of subdued activity, the market has been rocked by consecutive days of massive liquidations. As reported by CryptoPotato and detailed in data from Coinglass, these events saw roughly $600 million in leveraged positions wiped out on a recent Monday, followed by approximately $400 million each on the subsequent Wednesday and Thursday. This relentless pressure pushed Bitcoin (BTC) to briefly break below the $85,000 support level and sent Ethereum (ETH) tumbling under $3,000, with any steep rebounds being quickly sold into by the market.

This struggle has placed Bitcoin on track for a near-24% loss in the fourth quarter, which would mark its weakest Q4 performance since 2018. The $90,000 level has proven a difficult barrier, with BTC failing to secure a clean break above it before retreating back toward the high-$80,000 range, as daily liquidations continued near the $250 million mark. Wintermute’s internal flow data points to a critical structural shift: buying interest is now intensely focused on BTC and ETH, with institutional demand holding steady. Meanwhile, retail traders appear to be exiting smaller tokens and retreating to these major assets. “BTC and ETH continue to act as the primary risk absorbers, while the broader market struggles under supply pressure and limited risk appetite,” the firm noted, highlighting the continued weight of token unlocks and excess supply on altcoins.

The current choppy and volatile conditions are not occurring in a vacuum; they are deeply linked to the psychological and structural damage inflicted by a massive sell-off in October. Analysts point to that event, which wiped more than $12,000 from Bitcoin’s price in a single day, as a pivotal moment that severely damaged market confidence in leverage-heavy trading strategies. The fallout is evident in the year-to-date metrics, with BTC down about 7% and heading for one of its rare annual losses, a stark contrast to its relatively strong underlying fundamentals.

Wintermute echoed this sentiment, warning that the current environment remains precarious. Price discovery is still happening “at the margin via derivatives,” a mechanism that leaves the market vulnerable to sudden air pockets when crowded, leveraged positions are forced to unwind rapidly. This derivatives-driven dynamic is reflected in compressed funding rates and options markets that are pricing in wide potential outcomes. Compounding this instability is the seasonal thinning of liquidity as holiday trading desks wind down their operations, creating a perfect storm for abrupt price movements.

Looking ahead to the new year, Wintermute expects quieter, range-bound trading conditions to persist through the immediate year-end period, barring the emergence of a clear macroeconomic or policy trigger. However, the firm cautions that this relative calm on the surface may belie underlying fragility. The fundamental driver of near-term price action is likely to be market positioning rather than deep-seated investor conviction.

This distinction is crucial. While institutional involvement in the cryptocurrency space continues its long-term growth trajectory, the immediate horizon suggests that volatility will remain elevated. Moves will be dictated by the unwinding and rebuilding of leveraged bets in a thin liquidity environment, not by a broad-based reassessment of value. Consequently, even as overall trading activity slows, the potential for sharp, derivatives-fueled swings—both up and down—remains significant as the market continues to grapple with the structural uncertainty carried over from a turbulent 2025.