Approximately $794 million worth of leveraged Bitcoin long positions were liquidated this week as BTC's price slipped to around $87,800, according to on-chain data and Coinglass. The event highlights the dominant role perpetual futures now play in Bitcoin's short-term price action, with derivatives accounting for over 75% of total crypto trading activity in 2025.
The liquidation cascade followed a familiar pattern: Bitcoin bounced, traders increased leverage, and funding rates turned positive, indicating crowded long positions. When the market pushed into weak spots, overexposed positions were knocked out, triggering forced selling. "Once long trades piled up, it didn't take much for the market to flip into forced selling," the report notes. On Binance and other exchanges, liquidations begin when a trader's collateral falls below the minimum margin requirement, prompting the exchange to automatically sell the position into the market.
Kaiko research indicates that BTC perpetuals accounted for about 68% of Bitcoin's trading volume in 2025. This dominance means short-term price moves rely less on fresh spot buyers and more on where traders stack risk, funding costs, and the speed of forced position unwinding. The mechanics of perpetual futures, which use a funding rate system to stay near the spot price, can nudge traders into crowded positions. Extended positive funding rates signal that longs are paying shorts to maintain their bets, creating a jumpier market susceptible to rapid downturns.
Even after the $794 million flush, liquidation heatmaps indicated continued danger zones stretching down toward $80,000. Analysts describe a cyclical pattern: a sharp drop is followed by a calmer bounce as traders re-enter, then often another dip as the market searches for the next liquidity pocket. The recent slide below $90,000 appears more a leverage wipeout than a wave of spot investors exiting. In a separate, shorter-term event, an additional $130 million in crypto longs were liquidated within one hour, primarily affecting Bitcoin and Ethereum, with BTC briefly dropping below $88,000 and ETH below $3,000.
Market observers attribute the volatility to rising macroeconomic uncertainties and profit-taking after significant gains. Over $1 billion was liquidated across the market within a 24-hour period. The events have prompted increased investor caution, though continued accumulation by larger investors (whales) signals underlying confidence. The market's daily swings are increasingly driven by these mechanical liquidation cycles rather than headline news alone.
