Friday morning felt different.
I woke up, grabbed my phone like always, and saw red everywhere. Not the gentle 1-2% dips we laugh off. Real red. Bitcoin under $90,000 after kissing $93,500 just days ago. Ethereum bleeding. Solana down five percent before most people had their coffee. And the liquidation numbers? Absolutely brutal.
Almost half a billion dollars gone in 24 hours. That kind of number makes even seasoned traders sit up straight.
The Deleveraging Cascade Nobody Saw Coming (Or Did We?)
Let’s be honest – the warning signs were there. Anyone watching open interest knew the party had gotten a little too wild. We hit $225 billion in total crypto futures open interest back in October, the highest ever. That’s an insane amount of leverage floating around.
Fast forward to today? Open interest sits at $127 billion. That’s a 43% drop from the peak. When that much leverage unwinds, prices don’t just “correct.” They get punished.
I’ve been through enough cycles to know this pattern. Extreme greed → record open interest → sudden risk-off event → cascade liquidations → fear takes over. Rinse and repeat.
What the Liquidation Numbers Actually Tell Us
Here’s what jumped out at me this morning:
- Total liquidations: $491 million in the last 24 hours (up 75% from Thursday)
- 135,667 traders rekt
- Bitcoin liquidations alone: $191 million
- Ethereum: $116 million
- Longs made up roughly 82% of the damage
That last point is crucial. When the vast majority of liquidations are longs, it tells you the market was aggressively positioned for upside. Everyone piled in after Bitcoin broke $80K, convinced we were going straight to $100K+. Reality just slapped them in the face.
“The higher the leverage, the harder the fall.”
Every crypto trader ever, apparently
The $4.8 Billion Options Time Bomb
Here’s what makes this dip extra spicy – tomorrow (December 6) we have one of the largest options expiry events of the year.
We’re talking $4.8 billion notional value set to expire:
- Bitcoin options: ~$3.5 billion (max pain around $91,000)
- Ethereum options: ~$700 million (max pain $3,050)
Max pain is that magical price where the highest number of options expire worthless. Dealers and market makers hedge accordingly, and price has an eerie tendency to gravitate toward max pain in the final hours.
Guess where we’re trading right now? You got it – dancing dangerously close to those levels. The volatility we’re seeing today is just the warm-up act.
Who Got Hit the Hardest?
Beyond the blue-chip coins, some tokens took absolute beatings:
- Pepe down over 8%
- Bonk and Popcat both down 7%+
- DeFi names like Hyperliquid, Morpho, Aerodrome Finance, and Aptos down double digits
- Even “safe” layer-1s like Solana shed 5%
It’s interesting – the coins that pumped the hardest on the way up are now leading the retreat. Classic risk-off behavior.
Is This Healthy Profit-Taking or Something More Serious?
Here’s where opinions split.
On one hand, Bitcoin went from $80K to $93K in under two weeks. That’s a 16% move in a heartbeat. Some profit-taking was inevitable. Add in the massive options expiry and deleveraging, and today’s move almost feels scripted.
On the other hand… the speed of the open interest collapse worries me. We’re not just seeing retail panic. This feels institutional. When open interest drops this fast, it usually means big players are reducing exposure – either because they’re taking profits or because they see storm clouds.
And those storm clouds? They have names.
Next Week’s Fed Decision Looms Large
Traders are pricing in a 93% chance of a 25bps rate cut next Wednesday. That jumped from under 50% just days ago.
Normally, that would be rocket fuel for risk assets like crypto. But here’s the catch – the market has already priced in multiple cuts for 2025. If the Fed sounds even slightly less dovish than expected (or worse, pauses), we could see another leg down.
We’ve seen this movie before. “Good news is bad news” when markets are this extended.
What Happens Next? Three Scenarios
In my experience, we usually see one of three paths after a deleveraging event like this:
- Quick V-shaped recovery – Flush completes, open interest stabilizes, dip buyers step in aggressively. We’ve seen this after almost every major liquidation cascade in 2024-2025.
- Extended consolidation – Price grinds sideways while open interest rebuilds slowly. Boring but healthy.
- Deeper correction – If macro conditions deteriorate (hot CPI print, hawkish Fed, etc.), we could easily test $80K or lower.
Right now, I’m leaning toward scenario 1 or 2. The amount of dry powder on sidelines is still enormous, and sentiment flipped to “fear” faster than usual – often a contrarian buy signal.
But I’ve been wrong before. Many times.
Final Thoughts (From Someone Who’s Seen This Before)
Look, crypto doesn’t do “gentle.” It never has. We get these violent shakes every few months, everyone screams the bull market is over, and then we make new highs six months later.
Today hurts. No sugarcoating it. Watching your portfolio drop 5-10% in hours is never fun. But if you’ve been in this space longer than one cycle, you know this is just Tuesday.
The question isn’t whether we’ll recover. It’s whether you have the stomach to hold through the storm.
Because the storm always passes. It always does.
Stay safe out there. Manage your leverage. And maybe keep some cash ready – these dips have a way of creating millionaires on the other side.
