Crypto Traders Face Bigger Wipeouts as Bets Grow Riskier

The crypto world is seeing more dramatic losses as traders take on bigger risks. In the current market cycle, the average daily losses from failed trades have shot up. Long positions are now seeing around $68 million in daily liquidations, while short positions face about $45 million. This is a big jump from the last cycle, where long positions lost around $28 million daily, and shorts faced $15 million in losses. One of the most intense moments came on October 10th, dubbed "Early Black Friday. " During this time, Bitcoin's price dropped sharply from $121, 000 to $102, 000. This caused a massive wave of liquidations, with over $640 million in long positions wiped out every hour. The total open interest in Bitcoin futures dropped by 22% in just 12 hours, going from $49. 5 billion to $38. 8 billion. This event was one of the quickest and most severe deleveraging episodes in Bitcoin's history. Futures trading has been heating up, with open interest reaching a record high of $67. 9 billion. Daily trading volumes in futures markets have also surged, hitting as high as $68. 9 billion in mid-October. Perpetual contracts, which have no expiry date, make up over 90% of this activity. Bitcoin's spot trading volume has also doubled compared to the previous cycle. It now ranges from $8 billion to $22 billion daily. During the October 10th crash, hourly spot volume spiked to $7. 3 billion, more than triple recent peaks. This suggests that many traders saw the crash as a buying opportunity rather than a reason to panic and sell. Since the launch of U. S. spot exchange-traded funds (ETFs) in early 2024, Bitcoin's price has been more influenced by the cash market, while leverage has been increasingly built into futures. This shift has drawn more capital into Bitcoin, helping its market share grow from 38. 7% in late 2022 to 58. 3% today. Capital inflows into Bitcoin have been significant, ranging from $40 billion to $190 billion monthly. This has lifted Bitcoin's realized capitalization to a record $1. 1 trillion. Since the 2022 cycle low, more than $732 billion has flowed into the network, surpassing the total of all previous cycles combined. This suggests that the market is becoming more mature and institutionally anchored. Bitcoin is also making waves as a settlement network, rivaling major payment processors. Over the past 90 days, the Bitcoin network processed $6. 9 trillion in transfers, surpassing the volumes handled by Visa and Mastercard. Additionally, Bitcoin's supply is shifting from retail traders to institutional investors. Around 6. 7 million BTC is now held across ETFs, corporate balance sheets, and centralized and decentralized treasuries. Since early 2024, ETFs alone have absorbed about 1. 5 million BTC, while balances on centralized exchanges have declined.