Crypto Liquidations Surge as Leverage Increases: Insights from Glassnode

As the cryptocurrency market experiences intensifying activity, daily liquidations have nearly tripled amidst heightened leverage. A recent report from Glassnode reveals significant changes in futures trading, Bitcoin's spot trading volumes, and the increasing institutional presence in the Bitcoin ecosystem.

Key Takeaways

Daily liquidations in crypto have almost tripled, with longs averaging about $68 million and shorts around $45 million.
On October 10, a significant sell-off resulted in over $640 million wiped out per hour in liquidations.
Bitcoin’s spot trading volumes have seen a substantial increase, ranging from $8 billion to $22 billion daily.
The Bitcoin network has processed $6.9 trillion in transfers, outpacing major payment networks like Visa.
Institutional investment in Bitcoin is growing, with about 6.7 million BTC now held in various institutional avenues.

Crypto Liquidations Surge as Leverage Increases: Insights from Glassnode

Rise in Daily Crypto Liquidations

Daily liquidations in the cryptocurrency market have nearly tripled in this cycle, driven by increasing open interest and overall exchange activity that points to a more leveraged market. According to recent insights from Glassnode and Fasanara, the average daily wipeouts for futures have escalated significantly, jumping from approximately $28 million in long positions and $15 million in shorts during the last cycle to about $68 million in long positions and $45 million in shorts currently.

One of the most dramatic instances occurred on October 10, branded by researchers as “Early Black Friday.” During this sell-off, over $640 million in long positions were liquidated each hour, as Bitcoin’s price dropped from $121,000 to $102,000. Within just 12 hours, open interest plummeted by 22%, falling from $49.5 billion to $38.8 billion—a sharp deleveraging event in Bitcoin’s history, according to Glassnode.

The futures market has seen substantial growth, with open interest reaching an all-time high of $67.9 billion. In mid-October, trading volumes surged, hitting as high as $68.9 billion in daily turnover, where perpetual contracts accounted for over 90% of the activity.

Bitcoin Futures Market. Source: Glassnode

Significant Increase in Bitcoin Spot Volume

In addition to liquidations, Bitcoin's spot trading volume has doubled compared to previous cycles, now fluctuating between $8 billion and $22 billion daily. During the crash on October 10, the hourly spot volume surged to $7.3 billion—more than three times the recent peaks—as traders rushed to buy the dip instead of exiting the market.

The report indicates that since the launch of US spot exchange-traded funds (ETFs) in early 2024, Bitcoin’s price discovery has increasingly shifted to the cash market, while leverage in futures has grown. This transition has attracted investment into major assets, propelling Bitcoin’s market dominance from 38.7% in late 2022 to an impressive 58.3%.

Furthermore, capital inflows into Bitcoin have been notable, with monthly inflows varying between $40 billion and $190 billion. This influx has boosted its realized market capitalization to a record $1.1 trillion and contributed over $732 billion to the network since the cycle low in 2022, surpassing the cumulative amount from all previous cycles combined. Glassnode emphasized that these dynamics illustrate a market environment that is increasingly anchored by institutional investments and is structurally maturing.

The current market cycle spans from the market bottom in November 2022 to the present, in contrast to the previous cycle, which primarily captured the behavior during the bullish run in 2021 leading to the 2022 crash.

Bitcoin’s Emerging Role as a Settlement Network

Additionally, the report highlights Bitcoin's evolving role as a settlement network that is now competing with some of the largest payment systems worldwide. Over the past 90 days, the Bitcoin network has processed an impressive $6.9 trillion in transactions, exceeding the volumes handled by both Visa and Mastercard during the same timeframe.

Moreover, Bitcoin's supply is gradually shifting away from retail platforms into institutional ownership. Glassnode notes that around 6.7 million BTC is currently held across ETFs, corporate balance sheets, and both centralized and decentralized treasuries. ETFs alone have acquired approximately 1.5 million BTC since early 2024, while holdings on centralized exchanges have been on the decline.

Conclusion

As the cryptocurrency market continues to evolve, the significant increase in liquidations and trading volumes reflects a changing landscape that leans toward institutional investment and advanced trading strategies. Understanding these trends is critical for anyone looking to navigate the complexities of the cryptocurrency market.