Bitcoin News Today: Over-Leveraged Traders Trigger $636M Crypto Liquidation Wave

The crypto market endured one of its most volatile stretches in recent months, with over $636 million in leveraged positions liquidated across major exchanges in a 24-hour period. The sharp selloff, driven by a sudden shift in sentiment, disproportionately impacted long traders, who accounted for $567.35 million of the total liquidations, while short positions faced $69.54 million in losses according to the coinfomania.com report. The imbalance underscores the fragility of leveraged trading strategies in a market prone to rapid reversals.

The liquidation surge followed a broader market correction, as Bitcoin and Ethereum dropped sharply, eroding gains from recent rallies. Traders who had aggressively leaned into bullish bets during price surges found themselves exposed when momentum reversed. "This event highlights the risks of over-leveraged positions during high-volatility phases," noted the coinfomania.com report, which attributed the downturn to a combination of poor risk management and a lack of liquidity cushions in key price zones.

Market volatility intensified as intraday price swings widened, with liquidity tightening across major pairs. Analysts pointed to global macroeconomic triggers, including shifts in risk appetite in equity markets and tightening monetary policy expectations, as contributing factors. The Bank of Japan's potential December rate hike, for instance, fueled a carry trade unwind that exacerbated crypto's downward spiral. Meanwhile, the Federal Reserve's decision to end quantitative tightening on December 1, 2025, introduced uncertainty about future liquidity conditions, further complicating trader strategies.

The liquidation wave also exposed vulnerabilities in decentralized finance (DeFi) platforms, where exchange volumes collapsed to $397.78 billion in November-the lowest since June. Centralized exchanges fared only marginally better, with Binance reporting $599.34 billion in monthly volume, a 26.7% drop from October. The broader market pullback accelerated as leveraged traders scrambled to cover positions, triggering a self-reinforcing cycle of selling pressure.

Social sentiment mirrored the on-chain chaos, with traders on platforms like Twitter and Telegram sharing panic-driven updates. Many cited warnings about over-leveraged setups and tightening liquidity as red flags ignored during the recent bullish phase. "This is a textbook example of how leverage can amplify losses in a fast-moving market," one trader tweeted, echoing widespread frustration over the speed of the downturn.

Looking ahead, the market faces a critical juncture. While the Fed's termination of QT could theoretically boost liquidity, the path to recovery remains uncertain. Bitcoin's price, which dipped below $86,000 during the selloff, has shown limited resilience, and November marked the crypto market's worst monthly performance since February 2025. Exchange-traded products (ETPs) briefly rebounded with $1 billion in inflows, but Bitcoin ETFs continued to hemorrhage $3.48 billion in net outflows, reflecting deepening skepticism.

The crisis has also reignited debates about risk management in crypto trading. Experts urge participants to adopt stricter position sizing and hedging strategies, particularly as macroeconomic uncertainties persist. "The next move will test whether traders have learned from this crash," said one analyst, highlighting the need for discipline in a market where sentiment can shift within minutes.