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Bitcoin volatility surged as short sellers in perpetual futures drove a derivatives-led sell-off while spot buyers provided fragile support; open interest and liquidations spiked, signaling continued near-term price swings as the market digests heavy forced selling and cautious spot demand.
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Derivatives-led decline: Perpetual futures shorting pushed prices lower while open interest rose sharply.
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Spot investors absorbed some selling, with Coinbase spot CVD remaining mostly positive.
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Market impact: $724M liquidated in 24 hours; long positions accounted for $536M of the losses.
Bitcoin volatility rises as short sellers drive derivatives-led declines while spot buyers offer fragile support. COINOTAG reports data and expert views.
Why is Bitcoin experiencing sharp volatility?
Bitcoin volatility increased when short sellers in perpetual futures amplified a price pullback, while spot buying provided only limited absorption. Data shows rising open interest and large liquidations, indicating leveraged positions were forced out and leaving the market vulnerable to continued swings.
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How did derivatives shorts and spot flows interact to produce the sell-off?
Derivatives activity led the initial move. Velo data shows open interest rose 2.3% in the 90 minutes before the first drop, adding more than $591 million in notional exposure. Perpetual futures shorting — notably on offshore venues such as Binance and Bybit (plain text mentions) — coincided with a falling cumulative volume delta on offshore perpetuals, while the spot CVD remained steady.
When short selling intensified over the next two hours, open interest climbed another 4%, adding roughly $1.03 billion in exposure and driving a deeper fall to about $107,500 from $115,000. Spot sellers then joined, and the combined pressure triggered a $724 million liquidation event in 24 hours, with long positions accounting for $536 million of liquidations.
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Market analysts point to a mix of structural and macro drivers. Julio Moreno, head of research at CryptoQuant, told COINOTAG that “short traders are dominating in the perpetual futures markets right now, and spot demand is still in contraction based on on-chain data.” CoinGlass data also recorded increased bid activity on the spot bid-ask delta, suggesting spot buyers absorbed some selling but not enough to prevent the large forced liquidations.
Frequently Asked Questions
How large were the liquidation and open interest moves during the sell-off?
Open interest rose by about 2.3% in the first 90 minutes (adding >$591 million) and climbed another ~4% over the following two hours (adding ≈$1.03 billion). Total liquidations in 24 hours reached $724 million, with long positions responsible for $536 million.
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Did spot buyers prevent a deeper crash?
Yes, spot buyers provided partial support. Coinbase spot CVD stayed mostly positive, and spot bid-ask delta showed increased bid absorption. However, the support was fragile and insufficient to fully offset the leverage-driven selling from perpetual shorts.
Key Takeaways
- Derivatives dominated the move: Perpetual futures shorting led to rising open interest and forced liquidations, intensifying downward pressure.
- Spot demand was present but weak: Coinbase spot CVD and bid-ask delta indicate buy-the-dip activity, yet spot flows could not fully counteract leveraged selling.
- Expect continued volatility: Analysts cite macro uncertainty and concentrated leverage as reasons the market may need time to rebalance; monitor open interest and liquidation metrics.
Conclusion
Bitcoin volatility in this episode was driven primarily by derivatives dynamics, with short sellers in perpetual futures increasing open interest and triggering a large liquidation wave, while spot investors offered only fragile support. COINOTAG’s reporting uses data from Velo, CryptoQuant, CoinGlass, and on-chain indicators, plus expert commentary from industry analysts. Published: 2025-10-17. Updated: 2025-10-17. Author/Organization: COINOTAG.
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