Daily crypto liquidations have increased nearly threefold as the market sees a rise in open interest and activity on exchanges. This has led to a heavily leveraged environment.

According to a recent report from Glassnode and Fasanara, the average daily wipeouts in future contracts have escalated from approximately $28 million for long positions and $15 million for shorts in the previous cycle to $68 million for long and $45 million short this cycle.

On October 10, during what is described as “Early Black Friday,” the repercussions were highlighted as over $640 million per hour in long positions were liquidated when Bitcoin (BTC) dropped from $121,000 to $102,000. Open interest plummeted by 22% in less than 12 hours, descending from $49.5 billion to $38.8 billion, marking one of the sharpest deleveraging events in Bitcoin’s history.

Additionally, futures trading volumes have surged, with open interest peaking at a record $67.9 billion, and trading volumes reaching as high as $68.9 billion in daily turnover in mid-October, predominantly driven by perpetual contracts, which account for over 90% of trading activity.

Bitcoin Spot Volume Experiences Significant Growth

Bitcoin’s spot trading volume has also notably doubled compared to the last cycle, moving within a daily range of $8 billion to $22 billion. During the crash on October 10, peak hourly spot volume reached $7.3 billion, tripling previous highs as traders opted to buy the dip rather than exit the market.

Since the launch of US spot exchange-traded funds (ETFs) in early 2024, the price discovery of Bitcoin has been increasingly shifting towards the cash market as more leverage enters the futures market. This trend has attracted institutional capital, raising Bitcoin’s market share from 38.7% in late 2022 to 58.3% today.

Capital flow trends also support this narrative, with monthly Bitcoin inflows varying from $40 billion to $190 billion, elevating its realized market capitalization to a peak of $1.1 trillion and introducing over $732 billion to the network since the cycle low in 2022, surpassing all previous cycles combined.

“This signifies a market environment that is more institutionally anchored and structurally mature,” stated Glassnode.

Bitcoin’s Role as a Settlement Network

Moreover, the report highlighted Bitcoin’s increasing function as a settlement network, now competing with the largest payment processing systems globally. Over the past 90 days, Bitcoin has processed $6.9 trillion in transactions, outpacing the volumes handled by Visa and Mastercard during the same timeframe.

As Bitcoin’s supply continues to move away from retail trading platforms and towards institutional investors, around 6.7 million BTC is currently held across ETFs, corporate holdings, and centralized and decentralized treasuries. Since early 2024, ETFs have alone acquired approximately 1.5 million BTC, while balances on centralized exchanges have decreased.