Bitcoin News Today: $5.01 Billion in Crypto Liquidations Driven by High Leverage and Volatility

Recent turbulence in the cryptocurrency market has been largely attributed to the widespread use of high leverage, particularly among retail and institutional traders. According to Coinglass data, on August 13, 2025, over 117,380 traders faced $5.01 billion in liquidations — the largest single-day liquidation event in recorded history [1]. This unprecedented figure was driven by sharp price swings in major cryptocurrencies like Bitcoin and Ethereum, with short positions accounting for 60% of the losses [1]. The largest exchanges, including Binance, OKX, and BitMEX, reported significant disruptions in leveraged positions during this period [1].

Bitcoin’s leverage levels have reached a five-year high, contributing to a fragile market environment where even minor price fluctuations can trigger cascading liquidation events [1]. Arthur Hayes, co-founder of BitMEX, was among those affected, liquidating 2,373 ETH worth $8.32 million amid the volatility [1]. The fragility of leveraged positions is further underscored by the formation of a $14 billion cluster of Bitcoin short positions near the $125,000 price level [1]. If BTC reaches this threshold, a short squeeze could force traders to buy back their positions, potentially sending the price higher.

According to Glassnode, open interest in major altcoins reached a record high of approximately $47 billion, indicating increased leverage activity across the market [1]. This surge in leverage has the potential to heighten price volatility. Ethereum’s options open interest came close to yearly peaks at around $16.1 billion, further highlighting the risks associated with leveraged trading [1]. CoinGlass data corroborates this trend, emphasizing that leverage can intensify upward movements while also accelerating market corrections if prices retreat from key resistance levels [1].

The impact of leveraged trading is not confined to crypto markets. Traditional capital markets have also felt the ripple effects. For instance, MicroStrategy (MSTR) dropped 2.2% amid Bitcoin’s volatility and capital market turbulence [2]. This demonstrates the growing interconnectivity between traditional financial systems and the crypto ecosystem.

Timothy Misir, BRN Research Director, noted that market risk appetite has increased, fueled by macroeconomic factors and inflows from Wall Street. He warned that low implied volatility alongside unprecedented altcoin open positions could lead to dramatic price swings at key resistance levels. Misir emphasized the potential risks of high leverage, stating, “High leverage can magnify price movements, posing substantial risks if market corrections occur.”

The recent liquidation event serves as a cautionary tale for traders and a wake-up call for regulators. With leverage at record levels, the next major price movement could trigger even greater instability [1]. Analysts have called for greater regulatory oversight to stabilize the market and prevent future over-leveraging crises [1]. The combination of leverage and high volatility increases the likelihood of sharp corrections, underscoring the need for clearer risk management frameworks [1].

Source:

[1] Record Liquidation: $5.01 Billion Crypto Implosion (https://coinmarketcap.com/community/articles/689c07d978c8230288c23fdf/)

[2] MSTR Plummets 2.2% Amid Bitcoin Volatility and Capital Markets Turbulence – What's Next? (https://www.ainvest.com/news/mstr-plummets-2-2-bitcoin-volatility-capital-markets-turbulence-2508/)