THE LIQUIDATION CASCADE
Is the leveraged liquidation wave over? Where is the true bottom?
In this latest crypto market plunge, one phenomenon deserves special attention: many investors aren’t selling voluntarily—they’re being forcibly liquidated by exchanges.
When investors use 10x, 20x, or even higher leverage, a relatively small move in the opposite direction can trigger a liquidation. Forced liquidations then create additional selling pressure, setting off a cascade of liquidations.
According to market data from November 13, total liquidations across the global crypto market at one point exceeded $1.6 billion in a single day. For BTC alone, estimated liquidations over the following 24 hours reached about $639 million, with longs accounting for roughly 93%. Meanwhile, BTC futures open interest fell by about 4.5%. This suggests the market is undergoing a significant deleveraging process.
But here’s the question: do all these liquidations mean the bottom is already in?
The answer is no.
To determine whether the market has bottomed, you can’t look only at liquidation amounts. You also need to watch three key indicators.
First, whether open interest continues to decline, indicating that excess leverage is truly being cleared out.
Second, whether funding rates return to neutral, so that large amounts of bullish leverage don’t continue to build up while prices are falling.
Third, whether spot trading volume recovers and whether any price rebound is backed by genuine buying demand.
If prices rebound but futures leverage quickly builds up again, the market could face another wave of liquidations.
In my view, what’s truly worth waiting for isn’t a single explosive green candle, but the simultaneous appearance of three signals: stable prices, cooling leverage, and a return of capital to the spot market.
A bottom isn’t something you guess. It’s something the market reveals over time, through capital flows.
Do you think the market has completed its deleveraging process?
Is the leveraged liquidation wave over? Where is the true bottom?
In this latest crypto market plunge, one phenomenon deserves special attention: many investors aren’t selling voluntarily—they’re being forcibly liquidated by exchanges.
When investors use 10x, 20x, or even higher leverage, a relatively small move in the opposite direction can trigger a liquidation. Forced liquidations then create additional selling pressure, setting off a cascade of liquidations.
According to market data from November 13, total liquidations across the global crypto market at one point exceeded $1.6 billion in a single day. For BTC alone, estimated liquidations over the following 24 hours reached about $639 million, with longs accounting for roughly 93%. Meanwhile, BTC futures open interest fell by about 4.5%. This suggests the market is undergoing a significant deleveraging process.
But here’s the question: do all these liquidations mean the bottom is already in?
The answer is no.
To determine whether the market has bottomed, you can’t look only at liquidation amounts. You also need to watch three key indicators.
First, whether open interest continues to decline, indicating that excess leverage is truly being cleared out.
Second, whether funding rates return to neutral, so that large amounts of bullish leverage don’t continue to build up while prices are falling.
Third, whether spot trading volume recovers and whether any price rebound is backed by genuine buying demand.
If prices rebound but futures leverage quickly builds up again, the market could face another wave of liquidations.
In my view, what’s truly worth waiting for isn’t a single explosive green candle, but the simultaneous appearance of three signals: stable prices, cooling leverage, and a return of capital to the spot market.
A bottom isn’t something you guess. It’s something the market reveals over time, through capital flows.
Do you think the market has completed its deleveraging process?
