Bitcoin is showing signs of a modest recovery following Friday’s record cryptocurrency crash. However, the fallout continues from a purge of leveraged bets exceeding $31 billion, which has left parts of the market struggling. The unprecedented washout has erased months of speculative activity, forcing some funds to exit the market entirely, according to traders. Data compiled by Coinglass indicates that open interest in Bitcoin futures has dropped to approximately $US70 billion from about $US94 billion across major exchanges. This represents the steepest single-day fall in over two years. The sharp contraction highlights the rapid unwinding of risk in a market still influenced by automatic margin calls and fragmented liquidity.
Vetle Lunde, head of research at K33, noted the destabilising magnitude of the de-leveraging. Lunde suggested that some funds may have collapsed, with long positions significantly impacted across the board. Despite the extreme pressure from liquidations, Lunde acknowledged Bitcoin’s resilient price action.
Traders are now focusing on shorter timelines, with open interest in Bitcoin options contracts expiring mid-month significantly higher than usual. According to Deribit by Coinbase, contracts expiring on October 17—with almost $US5 billion in notional value—are concentrated around puts at a strike price of $US108,000, and calls for $US125,000 and $US120,000. Deribit is a cryptocurrency derivatives exchange that facilitates the trading of options and futures contracts on various cryptocurrencies. Coinbase is a cryptocurrency exchange platform that allows users to buy, sell, and store digital currencies.
