Bitcoin News Today: Leverage-Induced Bitcoin Correction: $700 Million in Liquidations Sets Stage for Recovery

Within less than two days, Bitcoin's open interest has dropped by 8,500 BTC, indicating a $700 million reduction in leveraged bets and suggesting a significant market shakeout

. This decline, primarily caused by forced liquidations of leveraged positions rather than direct spot sales, has sent below $82,000, resulting in almost $2 billion in derivatives being liquidated on platforms such as Bybit and Hyperliquid . The overall value of the crypto market has now slipped under $3 trillion for the first time in seven months, intensifying concerns about a possible extended downturn .

Maarten Regterschot from CryptoQuant points out that this drop, driven by leverage, is a stark contrast to the spot-led liquidations seen in October. "This marks the first major washout since October 10, but

," he said. Bitcoin's open interest, which had exceeded October's peak by 5,000 BTC on Thursday, has now fallen to 286,461 BTC, showing .

Long positions in Ethereum and

have mirrored Bitcoin's decline, with liquidations totaling $183 million and $56 million, respectively . A major whale investor is now facing $37 million in unrealized losses on and Bitcoin long positions, down from $63 million earlier in November . Likewise, trader Jeff "Machi big brother" Huang has seen his profits wiped out, turning a $44.8 million gain into a $20 million loss .

The downturn has been worsened by unprecedented outflows from Bitcoin ETFs, with U.S.-listed funds seeing $3.79 billion withdrawn in November—the highest on record

. BlackRock's IBIT led the withdrawals with over $2 billion in redemptions, while ETFs experienced $1.79 billion in outflows . This has reduced the cushion that previously absorbed forced sales from perpetual contracts, increasing downward pressure on prices .

Investor sentiment remains deeply negative, with the Crypto Fear & Greed Index stuck in "Extreme Fear" territory and Myriad's perpetual sentiment market registering Fear at 49.7%

. Analysts such as Derek Lim from Caladan observe that significant economic events—like the conclusion of quantitative easing and potential U.S. stimulus—are still pending and will take time to influence the market .

Despite the current volatility, some believe a recovery could be on the horizon.

, the largest of this cycle, might establish a "firm bottom" for Bitcoin, according to CryptoQuant's "Darkfost." Historically, such periods of deleveraging have paved the way for renewed upward momentum . Meanwhile, analysts like Michaël van de Poppe suggest that surpassing $90,000 could set Bitcoin on course for a new record high .

Nevertheless, broader economic challenges remain. The strong U.S. dollar and increasing Treasury yields continue to weigh on risk assets, while low liquidity in ETFs and derivatives markets adds to the volatility

. For now, the market is left to determine whether this is merely a temporary correction or the start of a more significant reset.

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