What happened?
Derivatives funding rates plunged to 2022 lows after the biggest liquidation event in crypto history wiped out over $19 billion in leveraged positions. Altcoins suffered a median one-day drawdown of about 20% while Bitcoin saw more than $10 billion in open interest vanish. Funding rates briefly went deeply negative (around -0.4%) before recovering above zero within 24 hours.
Who does this affect?
Leveraged traders and anyone using cross-margined or high-leverage positions were hit hardest, with many accounts liquidated and some wallets losing millionaire status. Altcoin holders faced acute losses from the sharp drawdowns, while exchanges and liquidity providers had to absorb large forced sales. Institutional players and ETF investors felt the shock indirectly, and big whales who timed short positions profited and now influence market sentiment.
Why does this matter?
The mass deleveraging reduced immediate speculative pressure and briefly reset funding dynamics, which can both dampen and concentrate volatility in the short term. Strong spot ETF inflows show underlying institutional demand, meaning price moves could be amplified once approvals resume after the government shutdown. Key technical levels—like $116k resistance and $110k–$112k support—now determine whether Bitcoin resumes an uptrend toward $120k–$126k or falls back toward $100k, so traders should expect continued sharp swings.