Crypto Leverage Surge Sparks Record Liquidations, Bitcoin Dominance Grows

Recent data from a Glassnode and Fasanora report reveals a seismic shift in trader behavior, marked by a significant increase in the use of leverage. Average daily liquidations have surged from approximately $28 million on long bets and $15 million on shorts in the previous market cycle to about $68 million long and $45 million short currently. This more than twofold increase in wipeouts indicates that traders are operating with substantially higher borrowed capital, which in turn makes single market moves far more violent. The concentration of risk has transformed ordinary corrections into cascading liquidation events.

The October 10 sell-off stands as the clearest testament to this new, more fragile market structure. As Bitcoin’s price tumbled from $121,000 to $102,000, long positions were liquidated at a staggering rate exceeding $640 million per hour. The impact was immediate and severe: total open interest—the value of all outstanding derivative contracts—collapsed by roughly 22% in under 12 hours, plummeting from nearly $50 billion to $39 billion. Glassnode characterized this rapid unwinding of positions as one of the most acute deleveraging events ever witnessed in Bitcoin’s history, highlighting how amplified leverage can accelerate market downturns.

The backdrop to this volatility is a futures market that has swelled to unprecedented levels. By mid-October, aggregate open interest across crypto futures had climbed to a record $68 billion, with daily turnover topping $69 billion. A critical detail within this surge is the overwhelming dominance of perpetual contracts, which now account for more than 90% of all futures activity. These instruments, which reset funding rates continuously to track the spot price, concentrate risk and can exacerbate liquidations during sharp price movements, as evidenced by the rising average daily wipeout figures.

In contrast to the leveraged derivatives arena, spot trading—the direct purchase and sale of Bitcoin—has also seen remarkable growth, demonstrating a layer of underlying market strength. According to the report, Bitcoin’s daily spot volume has roughly doubled from the prior cycle, now operating in an $8 billion to $22 billion range. Notably, during the October 10 crash, hourly spot volume spiked to $7.3 billion. This surge was driven not by panic selling, but by a wave of traders ‘buying the dip,’ providing substantial buy-side support that helped stabilize the market and is increasingly influencing where price discovery occurs.

Amidst the turbulence in derivatives, Bitcoin’s fundamental position within the broader cryptocurrency ecosystem has strengthened considerably. Massive capital inflows, ranging from $40 billion to $190 billion monthly since the November 2022 low, have pushed Bitcoin’s realized market capitalization—a measure of the aggregate cost basis of all coins—to a record $1.1 trillion. In total, approximately $730 billion has flowed into the network since the last cycle’s trough, an amount that exceeds all previous cycles combined. This influx has directly fueled Bitcoin’s market share surge from 38% in late 2022 to 58% today, as reported by Glassnode and Fasanora.

Perhaps the most striking statistic underscoring Bitcoin’s maturation is its utility as a transfer network. Over the past 90 days, the Bitcoin blockchain processed nearly $7 trillion in on-chain transfers. This staggering throughput not only highlights robust network activity but also exceeded the transaction volume handled by major traditional card networks in the same period. For many market participants, this data point is a powerful reason to view Bitcoin not merely as a speculative digital asset or a store of value, but as an increasingly important and efficient global settlement rail—a foundational layer for value transfer.