Last week’s brutal liquidation wave may have set the stage for a healthier crypto market, according to research firm K33.

The collapse in leveraged positions triggered one of the largest deleveraging events in recent years, wiping out billions but clearing out excessive speculation.

K33’s head of research, Vetle Lunde, called the event “painful but constructive,” noting that overextended traders have been flushed from the system.

Bitcoin’s perpetual futures saw open interest plunge by nearly 50,000 BTC in a single day – an 18% drop – while Binance’s contracts traded at a rare 5% discount to spot. Lunde said similar events in the past have often signaled the formation of long-term market bottoms.

Altcoins suffered an even deeper blow, with leverage across major perpetual contracts dropping by 22% – the steepest contraction since the FTX collapse. Some tokens briefly crashed to near zero before exchanges halted cascading liquidations.

Despite the turmoil, K33 sees a more balanced landscape emerging. With leverage reset and risk appetite subdued, Lunde believes the market is now positioned for gradual recovery, supported by improving macro conditions and growing institutional demand.

“It’s a leaner, more stable market,” he said, “and that’s where sustainable growth begins.”

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