Over $400 million in leveraged positions erased as price volatility triggers automated sell-offs across global exchanges.
NEW YORK | December 30, 2025 — Global digital asset markets experienced a significant structural deleveraging today as a sharp contraction in Bitcoin and Ethereum prices triggered a cascade of liquidations. Derivatives data indicates that over-leveraged long positions were the primary casualty of the move, which saw prices break through technical support levels established earlier in the week. The velocity of the decline suggests a coordinated exit by short-term speculators, compounded by automated liquidation engines on major offshore exchanges.
Market participants in New York noted that the selling pressure intensified during the early European session, as liquidity gaps in the order books allowed for rapid price slippage. Unlike previous rallies driven by spot accumulation, the recent price action had been heavily supported by high funding rates and rising open interest, leaving the market vulnerable to a “long squeeze.” As Bitcoin dipped toward the $92,000 threshold, the momentum shifted, forcing manual and algorithmic closures of bullish bets.
A sudden breach of the $3,400 psychological support level in Ethereum triggered $120 million in forced liquidations within a thirty-minute window, accelerating the broader market downturn as cross-margined accounts were hit.
In London, desks reported that the liquidation event was not isolated to retail participants. Several mid-sized funds appeared to be caught off-side as the volatility expansion coincided with a lack of depth in the perpetual futures market. According to data reviewed by this publication, the funding rates for Bitcoin and Ethereum, which had been consistently positive for several days, flipped into negative territory briefly as shorts began to hedge against further downside risk.
The impact on Ethereum was particularly pronounced. While Bitcoin saw a measured retracement, Ethereum’s decline was sharper, leading to a spike in the ETH/BTC volatility spread. Traders in Singapore observed that the liquidation of large “whale” positions on decentralized finance (DeFi) lending protocols added further pressure, as collateralized loans faced margin calls. This forced selling in the on-chain environment mirrored the activity seen on centralized platforms like Binance and OKX.
Data reviewed by this publication shows a 12% drop in aggregate open interest across major derivatives exchanges, totaling a reduction of nearly $2.4 billion in notional value over the last 24 hours.
Institutional flows have shown a divergent trend throughout the day. While derivatives traders were flushed out, some institutional desks noted that spot demand remains relatively stable at lower price bands. However, the immediate concern for market makers remains the “air pocket” created by the rapid removal of bids. Analysts in New York said that the clearing of “frothy” leverage is a recurring feature of the current market cycle, though the scale of today’s event caught many by surprise given the relatively quiet macro calendar.
Regional differences in trading behavior were also evident. Asian markets saw heavy selling in the early hours, likely as participants react to overnight shifts in global bond yields. By the time the European markets opened, the liquidation cascade was already in full swing, creating a feedback loop that tested the resilience of exchange matching engines. The lack of significant buy-side intervention during the initial drop suggests a cautious approach to providing liquidity in high-volatility environments.
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The regulatory backdrop continues to hover over market structure discussions. Sources familiar with the matter indicated that recent inquiries by European regulators into exchange margin requirements have prompted some platforms to tighten their risk parameters. This adjustment in leverage availability may have contributed to the speed at which positions were closed today. Furthermore, large-scale transfers from exchange wallets to cold storage were observed, indicating that while leveraged traders are being sidelined, long-term holders may be utilizing the volatility to move assets into private custody.
Open interest in Ethereum futures remains a point of focus for the remainder of the trading day. Market participants said that until the liquidation volume subsides and funding rates stabilize, the risk of a secondary flush remains. The market remains sensitive to further updates regarding exchange health and the potential for additional on-chain liquidations as price floors are tested. For the time being, the aggressive flushing of long positions appears to have slowed, but bid-ask spreads remain wider than average.
Market participants pointed to adjustments by funds in London, who were seen de-risking Ethereum holdings in favor of cash-settled Bitcoin futures to reduce exposure to altcoin volatility.
As the day progresses, the focus shifts to the daily close. Technical analysts suggest that a failure to reclaim the $95,000 level for Bitcoin could signal a longer period of consolidation. For now, the market is digesting the removal of nearly half a billion dollars in speculative capital. The sentiment among professional desks remains one of cautious observation, as the “cleansing” of the derivatives market is often viewed as a prerequisite for a more sustainable price discovery phase.
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Global Markets Desk | DECODE THE CRYPTO
covers global crypto markets, regulation, and institutional trends.
