Key Takeaways
Why have Bitcoin’s Futures traders not capitulated?
Some overleveraged ones have, as the past seven days saw $840.4 million worth of BTC positions liquidated. Yet, overall, speculative interest witnessed continued long-term growth.
Are there any short-term signs of capitulation?
Yes, the estimated leverage ratio has taken a downturn over the past three days. The spot markets saw steady selling, and short-term holders faced sizeable losses.
Bitcoin has faced high selling pressure over the past month, and its loss of the $100k level sparked debate about whether the cycle top was in. Experts warned traders to prepare for a bear market.
The rampant fear in the market was not enough to severely disrupt the Futures trading volume. Yes, the Open Interest behind Bitcoin [BTC] has fallen dramatically since the first week of October.
Back then, the OI had been $94.12 billion. Just six weeks later, the OI stood at $67.21 billion.
Source: CoinGlass
This represented a 28.6% drop in OI. Even so, it was at the same level it had been in November-December 2024.
Toward the end of December, Bitcoin made its first foray past the $100k mark, an extremely important psychological round number.
Though it has lost the same level after seven months of trading above it, the Futures market chugged along just fine. Wild volatility and a possible macro trend shift were not enough to dampen speculators’ spirits for good.
Sticks and stones won’t break our bones, nor will a $19 billion wipeout
Crypto is gaining legitimacy in the public eye. Exchange-traded funds available and publicly traded companies hoarding Bitcoin and Ethereum [ETH], and other assets, are a vast shift from 2018.
Back then, Bitcoin was dubbed “a bubble, a Ponzi scheme, and an environmental disaster.”
Regulatory crackdowns worsened market panic in a nascent industry, whose participants could be forgiven for questioning if crypto could last even another year.
Source: Glassnode
The historic price crash on 10/10, which disproportionately hurt altcoins, saw $19 billion in liquidations within a single day.
The estimated leverage ratio, which is a measure of the average amount of leverage used by traders, has fallen to the March-April 2025 lows toward the end of October.
It took another downturn on Tuesday, the 18th of November, and was falling at the time of writing as well.
This metric can help find out when the market is overleveraged and in need of a correction, and also signal speculator capitulation.
Yet, as the relatively high OI (compared to Q4 2024) showed, capitulation doesn’t mean the Futures market becomes a ghost town.
The growing popularity of decentralized exchanges such as Hyperliquid [HYPE] proves this. Bitcoin is here to stay, and so is leverage in the Futures market, for better or worse.
