Speaking on this broad liquidation event, Sean Dawson, head of research at Derive.xyz, told CryptoSlate:
“This sharp move appears to be the result of overleveraged positioning, particularly following ETH’s recent run-up, and an overnight dip in the S&P 500, which weighed on risk assets more broadly.”
Notably, the most significant single liquidation came from a BTC-USDT order worth $39.2 million on HTX.
Long traders, those betting on a price increase, absorbed the bulk of the losses, giving up $699.5 million, while shorts lost $112.2 million. This skew toward longs suggests that traders misjudged the strength of the recent rally, leaving them vulnerable when the price pulled back.
Meanwhile, the significant liquidations have fed into growing bearish sentiment among market participants, according to data from Derive.xyz
Data from the crypto derivatives trading platform showed that crypto traders now see a 35% probability of Bitcoin falling to $100,000 before the end of September, and a 55% chance that Ethereum could retest $4,000.
Dawson explained that the 25-delta skew has turned negative for both BTC and ETH, meaning traders are paying more for downside protection than upside exposure.
According to him:
“This is the strongest demand for downside protection we’ve seen in two weeks. Traders appear to be bracing for potential retests of $4,000 for ETH and $100,000 for BTC.”
He further noted that macroeconomic headwinds and volatility are weighing on the outlook, resetting risk appetites across the market.
