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Bitcoin struggled to hold its ground on Monday after a brutal $20 billion leveraged flush-out crushed large parts of the crypto market late Friday, according to data from CoinGecko.
The selloff wiped out weeks of risk buildup and triggered widespread liquidations, with open interest in Bitcoin futures dropping from around $94 billion to $70 billion in a single day, the worst plunge in over two years. The market, still dominated by fragile liquidity and auto-liquidation systems, buckled hard under pressure.
Vetle Lunde, who leads research at K33, said the scale of the flush was “likely destabilizing.” “Some funds may have gone belly up,” Lunde said, “and longs got absolutely obliterated across the spectrum. Incredible amounts of pain in BTC, but very resilient price action given the extreme pressure from liquidations.”
Traders rotate into new positions as altcoins collapse
On Monday afternoon in New York, Bitcoin was trading near $115,000, bouncing back from Friday’s plunge below $105,000. But the bounce did little to fix the damage. The combined market cap of all cryptocurrencies rose above $4 trillion, but most of that came from short-covering and cautious inflows.
Ether, which had dropped under $3,500 on Friday, climbed back to about $4,200 by Monday. Altcoins got hit even harder. Leveraged exposure in these smaller tokens collapsed by 91 basis points over the weekend, the sharpest drop ever recorded.
These assets, often propped up by high-risk leverage and thin liquidity, dropped as much as 40% within minutes, especially after President Donald Trump’s 100% tariff threat on Chinese imports rocked global markets late Friday.
The freefall finally slowed after Trump and Vice President JD Vance signaled on Sunday they’d be open to negotiating a deal with China.
That helped cool off some of the panic heading into Monday, but the storm had already cleared out overleveraged positions across the board.
At the same time, Bitcoin options expiring on October 17 saw a notable spike. Contracts around $108,000 puts and $120,000 to $125,000 calls added up to nearly $5 billion in notional value, based on figures from Deribit by Coinbase.
Traders sharply narrowed their timelines and repositioned for volatility in the short term instead of directional bets.
Leverage clears out but market structure holds
Roughly $19 billion in open interest vanished over the weekend. Funding rates on futures fell to depths not seen since the 2022 bear market. Indicators like RSI and spot CVD showed that buying dried up while selling took over.
At the same time, realized profit-loss metrics pointed to serious loss booking as traders unwound speculative bets built up over the past few months.
Still, the larger structure of the market didn’t fall apart. Spot trading volumes remained strong, ETF inflows continued, and entity-adjusted transfer volumes stayed active, signaling that institutional capital didn’t flee with the degens. In fact, the underlying on-chain activity shows that most wallets are still sitting on profits — just not as fat as last week.
Options markets stayed busy. Open interest continued rising as traders adjusted to new volatility expectations. A slight uptick in put-call skew suggested that demand for downside protection was rising again. Meanwhile, profitability ratios eased from extremes but stayed high enough to suggest the majority of holders haven’t been thrown into loss territory.
“Relative stability over time has allowed this leverage behemoth to surge, breeding the instability of the weekend,” Lunde said. “Impact has been massive. Leverage was extremely high, and a cascade inevitable. Tariffs turned out to be the catalyst.”
Before the crash, Bitcoin had just hit $126,251 last Monday, fueled by renewed optimism around Trump’s second-term pro-crypto policies. Now, attention in the options market is locked on strike prices of $125,000 and $140,000, where open interest has clustered for call contracts.
With the mess cleared, the market enters a consolidation phase defined by caution, reduced risk, and selective positioning. Momentum is gone. Leverage is gone. What’s left is a battered but intact crypto system trying to rebuild — slower, quieter, and more careful than before.
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