Bitcoin experienced a significant price drop on Thursday, fueled primarily by a surge in short selling in the derivatives market, which triggered a massive $724 million liquidation event across the crypto market.
The decline began with short perpetual sellers on offshore exchanges (like Binance and Bybit), who drove the initial 1.5% dip from $115,000. This was confirmed by a rising open interest—which added over $591 million in notional value—while the cumulative volume delta (CVD) of perpetual futures decreased.
As short selling intensified, spot sellers joined the fray, pushing Bitcoin down 3.5% to as low as $107,500. Long positions bore the brunt of the chaos, accounting for $536 million of the total liquidations, indicating excessive leverage among bulls.
Despite the derivative-driven chaos, a key divergence emerged: spot buying activity remained “mostly positive” on U.S. exchanges like Coinbase, suggesting that spot investors were engaging in “buy-the-dip” activity and absorbing the selling pressure from leveraged shorts.
Analysts attribute the volatility to a combination of excessive leverage, macroeconomic uncertainty, and rising geopolitical tensions. Following the $19 billion leverage washout, the market is now in a “wait-and-see mode.” While spot buyers are showing resilience, the market is expected to need time to rebalance, with continued volatility likely as long as macro uncertainty persists.
October 2025, Cryptoniteuae
