Bitcoin Longs Absorb $403.58 Million Liquidation Flush as Leverage Rebuilds

Wednesday's Flush Stayed Inside the Normal Band

Wednesday's session gave the leveraged side of the crypto market its first real test in weeks, and the cleanup that followed stayed far smaller than the October 10 crash it keeps being compared to. Bitcoin (BTC) price slid 1.7% during the session to about $84,100, while Ethereum (ETH), the largest proof of stake network, dropped 3.5% alongside it. The damage concentrated in long positions: $403.58 million in leveraged buy-side bets were wiped out within a single hour, and across the 24 hours to Wednesday morning the total reached $487.02 million as Bitcoin (BTC) fell 1.96%. The flush naturally revived memories of 10-10, when a rally built on borrowed money rather than fresh buying collapsed and almost $17 billion in longs were liquidated.

The comparison, however, runs in the market's favor. Wednesday's liquidation works out to roughly $248 million of forced selling for every 1% of downside. On 10-10 the same measure reached about $2.2 billion per 1%, nine times heavier, while ordinary 2025 corrections ran between $157 million and $504 million per percentage point. Forced selling of that size absorbs easily; a cascade requires selling that feeds on itself, and nothing in the tape suggests it did. As of this writing, Bitcoin, the largest proof of work asset, trades near $84,000, down 2.1% over 24 hours, and Ethereum sits at $2,615, down 3.6%, both roughly flat since the morning readings.

Leverage Rebuilt at a Lower Price

The more uncomfortable part is what sat underneath the dip. Open interest, the value of futures bets still open, rose 4.0% this week to 650,480 Bitcoin (BTC), a pace that mirrors the run-up ahead of the October 10 collapse, when it grew 4.1% in five days. Measured against market size, the load is a shade lighter than before the crash: Bitcoin's open interest now equals 3.2% of its market value against 3.7% then, and Ethereum's sits at 10.4% versus 11.3%. Dollar totals hide much of that adjustment, because since October 10, 2025, Bitcoin's open interest has fallen 38.6% in dollar terms but only 12.7% in coins, a gap explained mostly by the lower price. In other words, the market carries nearly as much leverage for its size as it did before 10-10.

What has changed is the cost of carrying it. Funding rates, the small payments long traders make to shorts to keep positions open, show how crowded the buy side is. They topped 8% annualized on 18 of 32 exchange-days on Binance and Bybit before the crash; this week they cleared 8% just once in 28 days and turned negative three times. Deribit's readings match, with daily Bitcoin (BTC) funding at 26.9% before 10-10 against 7.1% this week. A major fuel source has drained as well: Ethena's USDe, a dollar token backed by hedged derivatives trades rather than liquid staking collateral, has shrunk 66% to $4.99 billion, fitting the broader deleveraging since October. Positions are growing again, but no crowd is paying up to hold them, which leaves fewer stretched longs to topple at once.

Fed Meeting on Oct. 27-28

COINOTAG's reading of the derivatives open-interest and funding data is that the structure which broke on 10-10 was a crowd paying to chase price, and that crowd has not returned. The next test has a date: the Fed meets on Oct. 27 and 28, and another rate hike after September's increase could lift bond yields and press Bitcoin toward the $82,300 support, which sits near the Sept. 28 low. A break below that level with funding back above 8% would reopen the 10-10 scenario; a reclaim of the $86,000 resistance would confirm the reset. While funding stays contained, momentum gauges such as the RSI need not reach oversold before a base can form.