The cryptocurrency market is experiencing one of the largest “resets” of leveraged positions in recent years. After a sharp crash on October 11, funding rates fell to their lowest levels since 2022, when the industry was under pressure from the FTX collapse and the Terra ecosystem crash.
Record reduction in leverage and liquidations
Volume of long position liquidations
According to Glassnode, aggregate funding rates for major assets went into negative territory, recording the most aggressive deleveraging in the market’s history.
Analysts note that such values were only observed at the end of 2022, when mass liquidations and the fear of a final crypto collapse drove the bitcoin price down to $16,000.
At that time, the market experienced a chain reaction of liquidations after the FTX crash, and in 2025 the scenario repeated: the drop in funding rates indicates a large-scale reduction in long positions and investors leaving risky assets.
Glassnode explains that this process reflects a “deep reset” of the market and a cleansing of excessive speculative positions. This may reduce volatility in the short term and strengthen the market structure in the long term.
What the data shows
Comparison of long and short positions on BTC.
The drop in funding rates coincided with bitcoin’s fall to $102,000, ethereum to $3,500, and solana below $140. According to CoinGlass, $16.7 billion in long and $2.46 billion in short positions were liquidated in a single day — the largest one-day purge in crypto market history.
According to Glassnode’s Long/Short Bias chart, large traders began increasing short positions as early as October 6, long before the crash, which may indicate insider activity.
After the liquidations, some positions were closed, but the balance between longs and shorts remains negative.
Sentiment reset
Experts note that what is happening is not just a technical correction, but an emotional reset of the market.
‘Volatility works both ways. Traders suffered both on the drop and on the sharp rebound. But the market structure remained stable,’ explained Justin d’Anethan, head of partnerships at Arctic Digital.
According to him, ETF inflows remain high, exchange reserves are at cycle lows, and after the shock sell-off the market even looks stronger.
The market is recovering, but risks remain
Despite the largest liquidations in recent years, cryptocurrencies quickly began to recover. Bitcoin rose 3.3% in a day to $115,000, ether gained 8.7% to $4,151, and BNB set a new high at $1,370.
Altcoins ADA and DOGE also gained almost 10%, indicating buyer activity taking advantage of the “sale”.
However, analysts warn that it’s too early to relax.
According to several sources, a major bitcoin whale who opened a short 20 minutes before the crash has again increased their position by $70 million. Experts fear this could trigger a new wave of selling in the coming days.
What this means for the market
The decline in funding rates reflects a cooling of speculative interest and a transition of the market to a more stable phase. For long-term investors, this may be a favorable moment to restore positions, but short-term risks remain high.
As Glassnode analysts note, ‘the market is getting rid of excessive optimism.’ Leveraged positions have burned out, liquidity has decreased, but the fundamental drivers of the bull cycle — ETF inflows and institutional demand — have not yet weakened.
Read more: Centralized exchanges suspected of underreporting the scale of liquidations
