Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Note that the cryptocurrency market has not fully recovered after the collapse that occurred in October, which caused widespread losses and the liquidation of large positions.
Despite positive catalysts, such as interest rate cuts, liquidity injections, and a decline in the US Dollar Index (DXY), no strong rally has emerged in Bitcoin or the market in general, which worries market participants. However, new data suggests that one of the main factors behind the market’s decline, the excessive use of leverage, may be on the decline.
Sponsored
Sponsored
Understand the nature of the weakness of the cryptocurrency market
The October market crash led to the largest liquidation in cryptocurrency history. BeInCrypto reported that more than $19 billion of leveraged positions were liquidated.
The event was called “Crypto Black Friday”, and BeInCrypto claimed that President Donald Trump had caused it by announcing a 100% tariff on China. However, the continued decline revealed deeper weaknesses in the market.
Markets saw additional waves of liquidation throughout November. The market was subject to liquidation of positions worth more than $1 billion several times during the month.
These market declines have been characterized by a disconnection from the usual catalysts. In mid-November, Kobeci’s letter noted that Bitcoin’s value continued to decline despite President Trump’s claims that making America “crypto first” was one of his priorities.
The publication highlighted that the initial pressure was the result of flows from institutions. In a moderately leveraged market, these flows were more likely to lead to a limited pullback reflecting a temporary imbalance between buyers and sellers rather than strong selling.
Kobeci’s letter stated that the problem was excessive levels of leverage among these outflows… Excessive levels of leverage seem to have made the market very sensitive.
The sale resulting from the liquidation wave led to a cascading effect. Each wave of forced sales pushed prices lower, causing additional liquidations and accelerating the pace of decline. The result was a sudden and rapid decline.
Sponsored
Sponsored
Evidence of leverage reduction and market reset
The structure of the market has changed dramatically since the crash. According to data from Coinglass, the open interest of traders in Bitcoin has decreased drastically.
The decrease in Bitcoin open interest indicates that traders are closing their positions in futures and perpetual contracts, reducing the overall value of outstanding derivative contracts. In practice, leverage is removed from the market.
AlFractal reported that between August and November, Bitcoin saw the highest number of leveraged trades in its history, reaching 80 million on 19 exchanges in a single day. This activity has now decreased, with the 7-day average now standing at 13 million trades.
“After the major liquidation event in October, the market became much more cautious towards BTC and leverage itself,” the post said.
While Bitcoin showed clear signs of reduced leverage, Ethereum presented a more complex picture. Register eth peak reached Almost 50 million trades in 2025. Its recent activity is still strong, with a 7-day average of 17.5 million.
This means that traders are moving further away from the leveraged trades associated with Bitcoin. Analyst Nolimit also explained what you do The current altcoin position includes “removal of excess leverage”, which is positive.
This indicates that although the market remains fragile, lower leverage indicates a weakening of a key structural risk. If this trend continues, it may create a more stable base for a future recovery.
