Bitcoin News Today: Bitcoin Faces $961M Liquidations as Leverage and Volatility Signal Flash Crash Risks

Recent developments in the cryptocurrency market have raised fresh concerns about the risk of a large-scale flash crash, driven by significant leveraged liquidations and signs of overbrought conditions. In late July and early August 2025, Bitcoin’s price volatility triggered over $1 billion in liquidations within a 24-hour period. The sharp pullback—such as Bitcoin falling from a record high of $124,000 to below $118,000—sparked widespread liquidations, particularly on leveraged long positions. On one day alone, $961 million was liquidated, with $821 million attributed to long positions, highlighting the extent of bullish exposure among traders [1].

At the time of reporting, Bitcoin’s price stabilized around $115,000 after a 2% intraday dip, though large liquidity clusters remained in place, signaling potential further downward pressure. The broader market also showed signs of distress, with Total2—the aggregated market cap of altcoins excluding Bitcoin—dropping by 3.84%. This decline reflects a capital outflow from altcoins and a rotation back into Bitcoin, as indicated by the BTC.D dominance metric, which has held steady around 59% for a week [1].

Derivatives activity has also intensified, with Bitcoin’s open interest (OI) increasing by nearly $380 million in under 48 hours. The Estimated Leverage Ratio (ELR) further suggests growing speculative activity, pointing to a build-up of leverage that could amplify future price swings [1]. These developments signal rising market tension and raise the possibility of another wave of forced liquidations.

Historical data from Coinglass indicates that Bitcoin’s OI has not followed the typical pattern seen before major price corrections. For example, in May 2025, Bitcoin reached $111,000 with OI at $81 billion, but the following day, OI dropped to $77 billion as prices fell to $107,000, leading to a broader market liquidation. In contrast, despite a nearly 8% drop from its all-time high, Bitcoin’s OI has not peaked, suggesting traders have yet to unwind their positions [1].

On exchanges such as Binance, long positions remain dominant, with over 60% of BTC/USDT perpetual trades skewed toward the long side. This imbalance increases the risk of a cascading liquidation event should prices drop further. Recent data also shows that total crypto liquidations over the past 24 hours reached $563 million, with $485 million concentrated in leveraged long positions—over 85% of which were wiped out [1].

Market observers warn that the current environment—characterized by high leverage, rising OI, and a false bullish signal from Bitcoin’s minor price rebound—could lead to another $1 billion+ liquidation event. With derivatives activity heating up and altcoins continuing to lose value, the conditions for a flash crash appear to be forming. If Bitcoin continues to decline, the market could enter a significant deleveraging phase as traders rush to close out overextended positions [1].

Source:

[1] AMBCrypto, "The $1 billion crypto liquidations warning – 3 signs another flash crash is coming!", https://ambcrypto.com/the-1-billion-crypto-liquidations-warning-3-signs-another-flash-crash-is-coming/