A sharp downturn swept through cryptocurrency markets on Monday, November 3, erasing more than $1.2 billion in leveraged futures positions and leaving over 300,000 traders liquidated in one of the largest deleveraging events in recent weeks. Bitcoin's rejection from weekend highs near $112,000 triggered a cascade of forced closures as the leading cryptocurrency plummeted to below $106,000, marking its lowest level since mid-October.

The liquidation wave hit hardest among bullish traders, with long positions accounting for nearly 90% of total losses—approximately $1.14 billion out of $1.27 billion in forced closures, according to data from CoinGlass, a leading derivatives analytics platform. Short positions represented just $128 million of the total wipeout, underscoring the extent of overleveraged bullish sentiment that had accumulated during the prior rally.

The liquidation carnage was concentrated across several major trading platforms, with decentralized perpetual exchange Hyperliquid leading the pack at $374 million in forced closures - remarkably, 98% of which were long positions. Centralized exchanges Bybit and Binance followed with $315 million and $250 million in liquidations respectively, highlighting how thin order books amplified price movements during low-liquidity trading hours.

The single largest liquidation occurred on crypto exchange HTX, where a massive $33.95 million BTC-USDT long position was forcibly closed, illustrating the severity of the correction for highly leveraged traders. Several notable cryptocurrency traders, including prominent figure Machi Big Brother, reportedly suffered multi-million dollar losses during the rapid price decline.

Understanding the Liquidation Mechanics

Liquidations occur when traders using borrowed funds - or leverage - see their positions forcibly closed because their collateral falls below required maintenance levels. On cryptocurrency futures exchanges, this process happens automatically: when prices move sharply against a leveraged trade, the platform sells the position into the open market to prevent further losses beyond the trader's initial margin.

Large clusters of long liquidations like Monday's event often signal capitulation among overleveraged bulls and can mark short-term bottoms in volatile markets. Conversely, heavy short liquidation waves may precede local price tops as momentum shifts dramatically.

Traders also monitor where liquidation levels are concentrated, as these zones can act as near-term support or resistance - forced buying or selling activity that temporarily impacts price action.

Altcoins Amplify the Pain

While Bitcoin bore the brunt of the sell-off with approximately $298 million in liquidations, altcoins suffered even steeper percentage declines. Ethereum liquidations totaled $273 million as ETH prices dropped roughly 7% to $3,621, marking a near three-month low according to CoinGecko data.

Solana saw particularly aggressive selling pressure with over 10% declines to $167, while XRP fell approximately 7% to $2.34. Other major tokens including Dogecoin, which plunged nearly 9%, and BNB also posted significant losses as speculative appetite waned across the broader cryptocurrency market.

Combined, Ethereum and Solana liquidations exceeded $300 million, with most altcoin positions trading lower as risk sentiment deteriorated throughout the session.

Federal Reserve Uncertainty Weighs on Risk Assets

The timing of Monday's sell-off came amid growing uncertainty about the Federal Reserve's monetary policy trajectory. Fed Chair Jerome Powell had recently indicated that December rate cuts were "not a foregone conclusion" following the central bank's 25-basis-point reduction in late October, which brought rates to the 3.75%-4.0% range.

Powell's hawkish tone at his October press conference emphasized "strongly differing views" among Federal Open Market Committee members about future easing, dampening market expectations for additional near-term rate cuts. Higher interest rates generally make traditional yield-bearing investments more appealing than speculative assets like cryptocurrencies, prompting capital outflows from the digital asset space.

Adding to the pressure, U.S. spot Bitcoin ETFs experienced $799 million in net outflows over the prior week, according to TradingView data. BlackRock's flagship Bitcoin ETF alone saw approximately $1.15 billion in withdrawals, reflecting reduced institutional participation and waning short-term confidence among professional investors.

Technical Factors and Market Structure

Analysts attribute the severity of Monday's liquidation cascade to several technical factors beyond macroeconomic catalysts. Bitcoin's latest rejection above $113,000 coincided with thin order books across major perpetual futures venues, amplifying price swings as cascading liquidations accelerated during Asian trading hours when liquidity is typically lower.

The Coinbase Premium Index, which measures the difference between Coinbase's spot price and average exchange prices, hovered around negative $30 during Monday's plunge. This suggests U.S.-based investors were net sellers, potentially leading the decline rather than buying the dip as they had during previous corrections.

Pseudonymous analyst Maartunn from CryptoQuant pointed to "signs of fragility" in recent Ethereum charts and noted that multiple retests of the same support level are typically bearish signals. "During strong bullish phases, you often don't get a retest of a support level because it gets front-run," he explained. "Multiple tests of the same support level are not a bullish sign."

Final thoughts

Despite Monday's massive liquidation event, Bitcoin futures open interest remains elevated near $30 billion according to CoinGlass aggregated data, suggesting substantial leverage persists in the market. Funding rates - the periodic payments between long and short traders on perpetual contracts - have eased only slightly from recent highs, indicating continued bullish positioning among derivatives traders.

This combination of high open interest and persistent positive funding rates suggests the market hasn't fully deleveraged despite the billion-dollar liquidation event. Such conditions typically mark what analysts call "clearing moments" in overheated markets, where excessive leverage resets temporarily before spot buyers gradually return.

However, the rapid reaccumulation of leveraged positions also signals that traders remain wary of further volatility, particularly ahead of the Federal Reserve's upcoming December policy meeting. With macroeconomic uncertainty elevated and technical support levels being retested, market participants face a delicate balance between positioning for potential upside and managing downside risks in an increasingly volatile environment.

Some contrarian traders viewed Monday's liquidation cascade as a potential buying opportunity. Data from blockchain analytics firm Arkham showed that one Bitcoin OG opened $37 million in BTC and $18 million in ETH long positions on Hyperliquid after the decline stabilized, demonstrating that sophisticated market participants see value at current levels.

As cryptocurrency markets digest Monday's deleveraging event, the path forward remains uncertain. With Bitcoin recovering slightly to trade above $107,000 by Tuesday, the question remains whether this liquidation wave represents a healthy correction that clears excessive leverage - or a warning sign of deeper market fragility amid deteriorating macro conditions and institutional retreat.