Bitcoin’s Record Run Reverses After $19B Futures Wipeout and Cooling ETF Inflows

Bitcoin’s rapid surge to an all-time high of $126,100 has been abruptly reversed , following one of the largest futures deleveraging events in history and weakening ETF inflows that signal cooling institutional appetite.

Bitcoin’s Record Run Reverses. Source: Glassnode

Massive leverage flush hits bitcoin derivatives

According to Glassnode’s latest on-chain report, over $19 billion in futures open interest was wiped out amid intensifying macroeconomic concerns, including renewed U.S.–China tariff tensions. The crash sent Bitcoin tumbling below the $117,000–$114,000 cost-basis zone.

The Estimated Leverage Ratio collapsed to multi-month lows as traders rapidly unwound positions, echoing the 2021 and 2022 market flushes. Funding rates also plunged to FTX-era lows, showing traders were paying to stay short after bullish leverage evaporated. Analysts described the event as a structural reset rather than a full capitulation — a necessary purge of excess leverage that could restore long-term stability.

Spot trading volumes surged during the drawdown, with Binance leading the sell pressure while Coinbase saw institutional buying, suggesting U.S.-based investors absorbed some of the shock. Despite heightened volatility, Glassnode noted the sell-off was “sharp but orderly,” underscoring that the market remains cautious but not in panic.

Institutional demand weakens as volatility returns

While derivatives markets faced a historic purge, ETF inflows turned negative by 2,300 BTC, marking a decline in institutional demand that had previously fueled Bitcoin’s record highs. Long-Term Holders (LTHs) have also continued to distribute since July, adding steady sell-side pressure as the market enters a consolidation phase.

Meanwhile, Bitcoin options markets saw open interest rebound swiftly, even as volatility spiked to 76% and short-term skew flipped sharply positive — signaling traders’ rush to hedge downside risks.

Bitcoin now sits in a fragile recovery zone, with analysts warning that a drop below $108,000 could deepen the correction unless renewed ETF inflows and on-chain accumulation restore momentum.

Still, beneath the turbulence, confidence among corporates remain strong — the number of publicly traded companies holding Bitcoin rose 38% between July and September, signaling that institutional conviction, while cooling short term, remains structurally intact.

 

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