Prices have already fallen, but leverage hasn’t gone anywhere. 40% of large-cap altcoins are still near their year-to-date leverage highs 🦖
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Glassnode’s October 20 report put it plainly: leverage in the altcoin market remains elevated. After leverage peaked earlier this month, the prices of the coins involved pulled back. But leverage on more than 40% of large-cap altcoins is still near its year-to-date high, while the share of mid-cap altcoins in a high-leverage state has also climbed to a year-to-date peak ⚠️
Let’s unpack that. The price pullback shows that the market has shed some of the froth through falling prices. But leverage hasn’t retreated along with it, suggesting that many traders aren’t admitting they were wrong and exiting—they’re holding on to their positions. Some may even be adding margin to keep holding through the decline. These positions might not look problematic while prices move sideways, but if the market drops another leg, paper losses can turn into forced liquidations 💥
Glassnode’s warning is clear: if prices fall further, a large number of long positions in the market could face liquidation risk. Liquidations don’t happen gradually; they happen in waves. The first forced liquidation pushes prices lower, the lower price leaves a second batch short on margin, and then another wave gets liquidated. That’s why many sell-offs play out in minutes, not days.
Looking at today’s market, Bitcoin is around $81,700, down about 1.1% in 24 hours; Ethereum is at $2,398, down about 1.06%; and SOL is at $105, down about 0.32%. The broader market is only slightly lower, but altcoin leverage is still elevated. That mismatch alone is a risk. Bitcoin’s rejection near $83,000 earlier shows that selling pressure remains overhead. What’s missing now isn’t a story—it’s spot buying strong enough to absorb the selling.
In my view, what really matters this time isn’t which coin has gained how much, but when leverage starts to decline involuntarily. Deleveraging by choice is healthy; involuntary deleveraging means liquidations. The former is a gradual decline in open interest; the latter is a chain of blowups in a matter of minutes. The difference determines whether your small-cap positions just pull back—or go to zero 🦕
There’s another detail worth noting: the share of mid-cap altcoins with high leverage has risen to a year-to-date high. These coins are already relatively illiquid, with limited market depth. The same volume of liquidations can cause greater price slippage. In other words, while large-cap coins fall 5%, these coins may already be down 15%. The leverage may be the same, but the risk isn’t.
So, there are three things worth watching next. First, can Bitcoin reclaim $83,000 and hold above it? Second, is open interest in altcoin futures starting to drop significantly? Third, is market depth getting thicker or thinner during declines? If prices fall and open interest falls too, that’s healthy deleveraging. If prices fall while open interest stays high, the powder keg is still loaded.
Are you still holding long positions in altcoins? Planning to ride it out, or take half off the table? Let’s talk in the comments 👀
Tap the profile picture to watch the livestream
Every day, I’ll help you keep up with the latest in crypto—not just what’s happening, but the logic and opportunities behind it 👀🚀
💬 群里一起聊行情
Glassnode’s October 20 report put it plainly: leverage in the altcoin market remains elevated. After leverage peaked earlier this month, the prices of the coins involved pulled back. But leverage on more than 40% of large-cap altcoins is still near its year-to-date high, while the share of mid-cap altcoins in a high-leverage state has also climbed to a year-to-date peak ⚠️
Let’s unpack that. The price pullback shows that the market has shed some of the froth through falling prices. But leverage hasn’t retreated along with it, suggesting that many traders aren’t admitting they were wrong and exiting—they’re holding on to their positions. Some may even be adding margin to keep holding through the decline. These positions might not look problematic while prices move sideways, but if the market drops another leg, paper losses can turn into forced liquidations 💥
Glassnode’s warning is clear: if prices fall further, a large number of long positions in the market could face liquidation risk. Liquidations don’t happen gradually; they happen in waves. The first forced liquidation pushes prices lower, the lower price leaves a second batch short on margin, and then another wave gets liquidated. That’s why many sell-offs play out in minutes, not days.
Looking at today’s market, Bitcoin is around $81,700, down about 1.1% in 24 hours; Ethereum is at $2,398, down about 1.06%; and SOL is at $105, down about 0.32%. The broader market is only slightly lower, but altcoin leverage is still elevated. That mismatch alone is a risk. Bitcoin’s rejection near $83,000 earlier shows that selling pressure remains overhead. What’s missing now isn’t a story—it’s spot buying strong enough to absorb the selling.
In my view, what really matters this time isn’t which coin has gained how much, but when leverage starts to decline involuntarily. Deleveraging by choice is healthy; involuntary deleveraging means liquidations. The former is a gradual decline in open interest; the latter is a chain of blowups in a matter of minutes. The difference determines whether your small-cap positions just pull back—or go to zero 🦕
There’s another detail worth noting: the share of mid-cap altcoins with high leverage has risen to a year-to-date high. These coins are already relatively illiquid, with limited market depth. The same volume of liquidations can cause greater price slippage. In other words, while large-cap coins fall 5%, these coins may already be down 15%. The leverage may be the same, but the risk isn’t.
So, there are three things worth watching next. First, can Bitcoin reclaim $83,000 and hold above it? Second, is open interest in altcoin futures starting to drop significantly? Third, is market depth getting thicker or thinner during declines? If prices fall and open interest falls too, that’s healthy deleveraging. If prices fall while open interest stays high, the powder keg is still loaded.
Are you still holding long positions in altcoins? Planning to ride it out, or take half off the table? Let’s talk in the comments 👀
Tap the profile picture to watch the livestream
Every day, I’ll help you keep up with the latest in crypto—not just what’s happening, but the logic and opportunities behind it 👀🚀