Bitcoin holds after massive leverage unwinding

23 Eylül 2025

Bitcoin holds after massive leverage unwinding with signs of structural maturity

Written by Samer Hasn, Senior Market Analyst at XS.com

Bitcoin steadied slightly today, inching higher after the sudden flush that took prices down to near $111,000 yesterday.

The modest rebound reflects attempts by buyers to regain footing following a heavy bout of liquidations that shook broader crypto markets.

The crash was driven primarily by a wave of deleveraging. The latest bull move of last week, which had been fuelled by the Federal Reserve’s rate cut, lost steam as buyers failed to extend momentum, leaving markets exposed to sellers in thin liquidity conditions in the early hours of Monday.

According to Coinglass, total long futures liquidations reached more than $1.65 billion on Wednesday, including $285 million in Bitcoin and $490 million in Ethereum. Futures open interest for Bitcoin dropped from Friday’s high of $85.8 billion to $82 billion, underscoring how quickly leveraged positioning unwound.

The damage was compounded by negative ETF flows, as Bitcoin spot ETFs recorded outflows of $363 million, the largest in more than a month.

The pressure extended beyond Bitcoin. Coinglass data shows that Ethereum futures open interest fell even faster, sliding from $64.7 billion on Saturday to $58 billion today. Ethereum’s leveraged positioning had expanded dramatically from nearly $17 billion in April to above $70 billion in August, creating an environment ripe for cascading liquidations. Funding rates on ETH futures even flipped negative, signaling that the balance of sentiment shifted sharply to the downside after yesterday’s crash.

Such events reignite questions about Bitcoin’s future volatility. According to BitcoinTreasuries, over 17% of all Bitcoins are now held by treasury entities such as corporations, ETFs, and governments, totalling more than 330 entities.

The growing presence of such players matters because their trading is less emotional and more structured compared with retail activity, which could gradually dampen volatility.

Evidence of this structural shift is already visible. Historical volatility in Bitcoin, even after the recent flushes, has fallen to its lowest levels since 2019. Likewise, the severity of maximum drawdowns has moderated, with peak-to-trough declines narrowing from more than 80% in past cycles to around 35% in recent bear corrections.

This suggests that while short-term turbulence from leveraged positioning will continue to spark violent swings, the longer-term profile of Bitcoin is increasingly shaped by institutional-style holders, potentially anchoring volatility at lower levels over time.

For Ethereum to become less volatile, it needs greater adoption by institutional and government treasuries. Currently, however, these entities hold only 3.1% of the total ETH supply, according to CoinGecko.

 

Zaid Barem / ymm