Billion-dollar liquidation events are no longer rare in crypto markets. While these crashes often appear suddenly, on-chain data, leverage positioning, and technical signals usually reveal stress long before forced selling begins. This article examines whether reconstructing major historical events can help anticipate liquidation cascades.

Keep reading on for early signals and how to read them together. Throughout this piece, we analyze two major events: October 2025 (long liquidation cascade) and April 2025 (short squeeze), and trace the signals that appeared before both. The focus remains primarily on Bitcoin-specific metrics, as it still accounts for nearly 60% (59.21% at press time) of total market dominance.

October 10, 2025 — The Largest Long Liquidation Cascade Came With Signs

On October 10, 2025, more than $19 billion in leveraged positions were taken out, making it the largest liquidation event in crypto history. Although US–China tariff headlines are often cited as the trigger, market data show that structural weakness was around for weeks. The majority of these liquidations were long-biased, almost $17 billion.

Price Extension and Leverage Expansion (Sep 27 → Oct 5)

Between September 27 and October 5, Bitcoin rallied from around $109,000 to above $122,000, eventually testing the $126,000 area. This rapid move strengthened bullish sentiment and encouraged aggressive long positioning.

During the same period, open interest rose from roughly $38 billion to more than $47 billion. Leverage was expanding fast, indicating growing dependence on derivatives.

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Gracy Chen, the CEO of Bitget, said modern market structure makes leverage far more synchronized than in earlier cycles.

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“Positions are built and unwound faster, across more venues… leverage behaves more synchronously… When stress hits, the unwind is sharper, more correlated, and less forgiving,” she added.

At the same time, exchange inflows fell from around 68,000 BTC to near 26,000 BTC. Holders were not selling into strength. Instead, supply stayed off exchanges while leveraged exposure increased.

This combination reflected a late-stage rally structure.

At this stage of the cycle, rising leverage or open interest, for that matter, not only increases trader risk. It also raises balance-sheet and liquidity pressure on exchanges, which must ensure they can process liquidations, withdrawals, and margin calls smoothly during sudden volatility.

When asked how platforms prepare for such periods, Chen, said risk management starts long before volatility erupts:

“Holding a strong BTC reserve is a risk management decision before it’s a market view… prioritize balance-sheet resilience… avoid being forced into reactive moves when volatility spikes…,” she said

Profit-Taking Beneath the Surface (Late Sep → Early Oct)

On-chain profit data showed that distribution had already begun.

From late September into early October, Spent Output Profit Ratio (SOPR), which tracks whether coins are sold at profit or loss, went up from around 1.00 to roughly 1.04, with repeated spikes. This indicated that more coins were being sold at a profit.

Importantly, this happened while exchange inflows remained low. Early buyers (possibly already exchange-held supply) were quietly locking in gains without triggering visible selling pressure. And BTC was already at an all-time high during that time.

This pattern suggests a gradual transfer from early participants to late entrants, often seen near local tops.

Short-Term Holders Flip From Capitulation to Optimism (September 27 → Oct 6)

Short-term holder NUPL (Net Unrealized Profit/Loss), measuring paper profits or losses. provided one of the clearest warning signals. On September 27, STH-NUPL stood near -0.17, reflecting recent capitulation. By October 6, it had surged to around +0.09.

In less than ten days, recent buyers moved from heavy losses to clear profits.

Such rapid transitions are dangerous. After emerging from losses, traders often become highly sensitive to pullbacks and eager to protect small gains, increasing the risk of sudden selling.

As sentiment improved, leverage continued rising. Open interest reached one of its highest levels on record while SOPR and NUPL began rolling over. BTC exchange inflows remained subdued, keeping risk concentrated in derivatives markets.

Instead of reducing exposure, traders increased it. This imbalance made the market structurally weak.

Momentum Weakens Ahead of the Breakdown (July → October)

Technical momentum had been deteriorating for months. From mid-July to early October, Bitcoin formed a clear bearish RSI divergence. Price made higher highs, while the Relative Strength Index, a momentum indicator, made lower highs.

This signaled weakening demand beneath the surface. By early October, the rally was increasingly sustained by leverage rather than organic buying, and the momentum indicator proved it.

Defense Phase and Structural Breakdown (Oct 6 → Oct 9)

After October 6, price momentum faded, and support levels were tested. Despite this, open interest remained elevated, and funding rates, which reflect the cost of holding future positions, stayed positive. Traders were defending positions rather than exiting, possibly by adding margin.

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Chen also mentioned that attempts to defend positions often amplify systemic risks:

“When positions approach liquidation, traders often add margin… Individually, that can make sense. Systemically, it increases fragility… Once those levels fail, the unwind is no longer gradual — it becomes a cascade,” she highlighted as the root cause for massive cascades.

More margin eventually led to a deeper crash.

October 10 — Trigger and Cascade

When tariff-related headlines emerged on October 10, the weak structure collapsed.

Price broke lower, leveraged positions moved into loss, and margin calls accelerated. Open interest fell sharply, and exchange inflows surged.

Forced short selling created a feedback loop, producing the largest liquidation cascade in crypto history.

Stephan Lutz, CEO of BitMEX, said liquidation cycles tend to appear repeatedly during periods of excessive risk-taking, in an exclusive quote to BeInCrypto:

“Normally, liquidations always come with cycles amid greedy times… they are good for market health…,” he mentioned.

Chen cautioned that liquidation data should not be mistaken for the root cause of crashes.

“Liquidations are… an accelerant, not the ignition… They tell you where risk was mispriced… how thin liquidity really was underneath, she said.”

Could This Long Liquidation Cascade Have Been Anticipated?

By early October, several long squeeze warning signs were already visible:

• Rapid price extension from late September
• Open interest near record levels
• Rising SOPR, indicating profit-taking
• STH-NUPL flipping positive in days
• Low exchange inflows concentrate risk in derivatives
• Long-term RSI divergence

Individually, these signals were not decisive. Together, they showed a market that was overleveraged, emotionally unstable, and structurally weak.

Lutz added that recent cascades have also exposed weaknesses in risk management.

“This cycle’s criticism isn’t much on leverage itself, but risk management and the lack of rigorous approach…”

The October 2025 collapse followed a clear sequence:

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Price extension → Open interest expansion → Rising SOPR (selective profit-taking) → Rapid NUPL recovery (short-term optimism) → Long-term RSI divergence (weakening momentum) → Leverage defense through margin → External catalyst → Liquidation cascade

April 23, 2025 — How a Major Short Liquidation Cascade Came With Hints

On April 23, 2025, Bitcoin surged sharply, triggering more than $600 million in short liquidations in a single session. While the rally appeared sudden, on-chain and derivatives data show that a fragile market structure had been forming for weeks after the early-April sell-off.

Early Technical Reversal Without Confirmation (Late Feb → Early April)

Between late February and early April, Bitcoin continued making lower lows. However, on the 12-hour chart, the Relative Strength Index (RSI), a momentum indicator, formed a bullish divergence, with higher lows even as the price declined. This signaled that selling pressure was weakening.

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Despite this, exchange outflows, which measure coins leaving exchanges for storage, continued falling. Outflows dropped from around 348,000 BTC in early March to near 285,000 BTC by April 8.

This showed that dip buyers were hesitant and that accumulation remained limited. The technical reversal was largely ignored.

Bearish Positioning After the April 8 Low (Early → Mid April)

On April 8, Bitcoin formed a local bottom near $76,000. Instead of reducing risk, traders increased bearish exposure. Funding rates turned negative, indicating a strong short bias. At the same time, open interest, the total value of outstanding derivatives contracts, rose toward $4.16 billion (Bybit alone).

This showed that new leverage was being built primarily on the short side. Most traders expected the bounce to fail and prices to move lower.

Exchange outflows continued declining toward 227,000 BTC by mid-April, confirming that spot accumulation remained weak. Both retail and institutional participants stayed bearish.

Selling Exhaustion on Chain (April 8 → April 17)

On-chain data showed that selling pressure was fading.

The Spent Output Profit Ratio (SOPR) was near or below 1 and failed to sustain profit/loss spikes. This indicated that loss-driven selling was slowing, even when buying was not picking pace. That’s a classic bottom sign.

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Short-term holder Net Unrealized Profit/Loss (STH-NUPL), which measures whether recent buyers are in profit or loss, remained in negative territory. It stayed in the capitulation zone with only shallow rebounds, reflecting low confidence and limited optimism.

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Together, these signals showed exhaustion rather than renewed demand.

Compression and Structural Imbalance (Mid April)

By mid-April, Bitcoin entered a narrow trading range. Volatility declined, while open interest remained elevated and funding stayed mostly negative. Shorts were crowded, yet prices failed to break lower and began stabilizing instead.

With selling pressure fading (SOPR stabilizing) but no meaningful spot accumulation emerging (weak outflows), the market became increasingly dependent on derivatives positioning. Buyers remained hesitant, while bearish leverage continued rising against weakening downside momentum. This imbalance made the market structurally unstable.

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April 23 — Trigger and Short Squeeze

By April 22–23, STH-NUPL moved back toward positive territory (shown earlier), showing that recent buyers had returned to small profits. Some holders were now able to sell into strength, while many traders still treated the rebound as temporary and added short exposure.

Notably, a similar NUPL rebound had appeared before the October 2025 long flush. The difference was context. In October, short-term holders turning profitable encouraged more long positioning as traders expected further upside. In April, the same return to small profits encouraged more short positioning, as traders in a corrective market viewed the rebound as temporary and bet on another decline.

This combination tightened liquidity and increased bearish positioning. When prices pushed higher, stop losses were triggered, short covering accelerated, and open interest dropped sharply. Forced buying created a feedback loop, and a positive tariff-related tweet helped, producing one of the largest short liquidation events of 2025.

🚨 TRUMP MAY CUT CHINA TARIFFS TO EASE TENSIONS

The Trump administration is weighing major tariff cuts on Chinese imports—possibly by over 50%—to reduce trade tensions, sources say. No final decision has been made, and options remain open.

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One idea is a tiered system:

🔸 35%…

— *Walter Bloomberg (@DeItaone) April 23, 2025

Could This Short Squeeze Have Been Anticipated?

By mid-April, several warning signs were visible:

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• Bullish RSI divergence from late February
• Persistently negative funding rates
• Rising open interest after the April low
• Weak exchange outflows and limited accumulation
• SOPR stabilizing near 1
• STH-NUPL stuck in capitulation

Individually, these signals appeared inconclusive. Together, they showed a market where shorts were crowded, selling was exhausted, and downside momentum was fading.

The April 2025 squeeze followed a clear sequence:

Momentum divergence → disbelief → short buildup → selling exhaustion (SOPR exhaustion) → price compression → positioning imbalance → short liquidation cascade.

Reflecting on repeated liquidation cycles, Chen said trader behavior remains remarkably consistent.

“Periods of low volatility trigger overconfidence… Liquidity is mistaken for stability… Volatility resets expectations… Each cycle clears excess leverage,” she added.

What These Case Studies Reveal About Future Liquidation Cascade Risk

The October 2025 and April 2025 events show that measurable changes in leverage and on-chain behavior led to the large liquidation cascades. Importantly, these cascades do not occur only at major market tops or bottoms. They form whenever leverage becomes concentrated and spot participation weakens, including during relief rallies and corrective bounces.

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In both cases, these signals emerged 7–20 days before liquidation peaks.

In October 2025, Bitcoin rose from about $109,000 to $126,000 in nine days while open interest expanded from roughly $38 billion to over $47 billion. Exchange inflows fell below 30,000 BTC, SOPR rose above 1.04, and short-term holder NUPL moved from -0.17 to positive within ten days. This reflected rapid leverage growth and rising optimism near a local peak.

In April 2025, Bitcoin bottomed near $76,000 while funding stayed negative and open interest rebuilt toward $4.16 billion. Exchange outflows declined from around 348,000 BTC to near 227,000 BTC. SOPR remained near 1, and STH-NUPL stayed negative until just before the squeeze, showing selling exhaustion alongside growing short exposure.

Despite different market phases, both cascades shared three features. First, open interest increased while spot flows weakened. Second, funding remained strongly one-sided for several days. Third, short-term holder NUPL shifted rapidly shortly before forced liquidations. And finally, if a reversal or a bounce setup surfaces on the technical chart, the liquidation cascade tracking becomes clearer.

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These patterns also appear during mid-trend pullbacks and relief rallies. When leverage expands faster than spot conviction and emotional positioning becomes one-sided, liquidation risk rises regardless of price direction. Tracking open interest, funding, exchange flows, SOPR, and NUPL together provides a consistent framework for identifying these vulnerable zones in real time.

Tomorrow, February 11, 2026, the first L1-zkEVM workshop will give a first look at a new system that could make block validation faster, cheaper, and more accessible for everyone.

Instead of re-executing every transaction in a block, Ethereum may soon rely on zero-knowledge (ZK) proofs, enabling validators to verify correctness through cryptographic proofs.

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Why Ethereum’s Shift to ZK Proofs Could Redefine Block Validation

Ethereum Foundation researcher Ladislaus.eth called it “arguably one of the more consequential” upgrades in the network’s history.

A closer look at where the Pi Network price might be headed in the next few days as the broader market continues to chop.

PI had no relief since early January. How low will the price go?

PI Network (PI) Price Predictions: Analysis

Key support levels: $0.13

Key resistance levels: $0.15

PI Downtrend Continues

Since the price began to decline in early January, PI has not experienced a relief rally. This selloff has been extremely aggressive and continues at the time of this post. With buyers absent, the search for a bottom continues. The current support is at 13 cents and the resistance is at 15 cents.

Selling Exploded

Since mid-January, selling pressure has increased sharply, which could indicate that some whales are exiting in a rush. This process appears to be ongoing, and until the sell volume drops, PI is unlikely to see a bounce.

Daily RSI Remains Oversold

Since January 20th, the daily RSI has been in the oversold region below 30. More concerning is that it has stayed in that zone since. This signals an extreme sell pressure that did not allow any recovery for the price. Expect lower lows as long as this persists.

ADA’s drop in open interest looks similar to Solana’s past pattern, where a fragmented market often comes before weaker altcoin momentum.

Cardano has experienced a sharp decline of over 10% over the past week. It started near $0.30, but heavy selling pushed it to $0.23, forming a consolidation to $0.26. Amidst strong bearish pressure, new data suggest that major traders have exited their ADA positions.

Alphractal founder Joao Wedson, for one, said that Cardano’s derivatives market is going through a major shift that could affect its price momentum.

Cardano Follows Solana’s Path

Open interest in ADA has declined sharply from $1.6 billion to $334 million, as major players have aggressively closed their positions. However, Wedson explained that the more important change lies in how OI is distributed across exchanges. In 2023, Binance controlled over 80% of ADA’s open interest, while 17 other exchanges combined held less than 20%.

By 2026, that balance has dramatically changed as Binance now holds only 22%, and Gate.io has emerged as the new leader with 31% of the market. Wedson observed that this change is significant because a similar pattern played out with Solana.

During SOL’s rally from $20 to $200 in 2023-2024, Binance’s dominance in open interest increased, thereby supporting price appreciation.

Later, as Binance’s share declined, Solana’s momentum weakened. The same trend appears to be unfolding with Cardano, and with open interest now fragmented, the altcoin’s upside potential may be limited as the overall crypto market remains fragile.

“Binance tends to be the exchange that fuels strong altcoin rallies, but only when leverage is concentrated and competition is limited.”

Long-Term Trend Remains Intact

Despite the short-term market uncertainty gripping the ADA market, pseudonymous analyst, ‘Crypto Patel,’ believes that the overall long-term structure stays bullish as long as the price does not fall below $0.13 on a weekly close.

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On the upside, he says ADA needs to reclaim $0.44 to confirm a new uptrend. If that happens, the crypto asset could enter a new bull cycle, and long-term targets range from $1.20 to as high as over $10, similar to past cycles.

Gold at $5k exposes how brutally altcoins have lagged, even as gold-backed RWA tokens like PAXG and XAUT surge in adoption and on-chain trading.

Real‑world‑asset tokens backed by gold sit at the center of this stress test. PAX Gold (PAXG), which represents title to allocated London Good Delivery bars, trades near $5,035.43, down 0.09% over the last 24 hours, with a $425.2M daily volume and a $4,985.75–$5,088.73 intraday range.

Leading the way are Ondo (ONDO), up about 0.3% over the last 24 hours, PAX Gold (PAXG), higher by roughly 0.6% on the day, Maker (MKR), gaining around 2–3% in 24 hours, and Chainlink (LINK), trading fractionally lower on the day, which analysts say may be bucking the broader crypto bear trend.

Tether Gold (XAUT) changes hands around $5,013.23, essentially flat on the day, after a 7.4% gain over the last week and an 11.41% rise over the past month. Both instruments track bullion tightly, but remain small compared with the broader crypto complex, underscoring how little capital has actually migrated into tokenized metals despite gold’s parabolic move. Live market stats for PAXG and XAUT are available on their respective crypto.news price pages:

The RWA Sector by the Numbers

Zooming out, the RWA sector is growing, but unevenly. CoinMetrics and Tokeny data put tokenized commodities—dominated by gold‑backed tokens like PAXG and XAUT—in roughly the $0.8–$1B range as of the latest comprehensive report, a rounding error next to spot gold’s multi‑trillion‑dollar market.

More recent industry analysis highlights a sharp acceleration: tokenized gold and silver market value has pushed to new highs into 2026 as regulatory clarity improves and large institutions experiment with on‑chain funds and vault‑linked products. Yet derivatives flow shows how violently this niche still trades; one recent week saw RWA perpetuals volume spike above $15.5B as gold futures dropped over 10% and silver nearly 28%, forcing liquidations across levered positions.

Altcoins vs Gold: Structural Cheapness, Not Just Panic

That backdrop explains why van de Poppe’s chart looks so extreme. Altcoins—especially sub‑top‑100 RWA plays—have been doubly hit: first by structural dilution (new token issuance, unlocks) and second by liquidity tightening that rewards “sleep‑at‑night” gold over speculative tails. As one responder put it, “altcoins hitting historic lows versus gold screams opportunity if you can stomach volatility… rsi at 25 on weekly shows extreme oversold conditions, rarely this extreme.” Whether that becomes the “ultimate arbitrage” for believers in the long‑term blockchain thesis, or just another value trap, will depend on the next macro liquidity flip—not on narratives alone.

A dual national of China and St. Kitts and Nevis has been sentenced to 20 years in US federal prison for orchestrating a global cryptocurrency scam that stole more than $73 million from victims, many of them American investors.

Forty-two-year-old Daren Li received the statutory maximum sentence in the Central District of California, along with three years of supervised release, according to a statement issued Tuesday by the US Department of Justice (DOJ).

Prosecutors said Li and at least eight co-conspirators established spoofed domains and websites resembling legitimate trading platforms to promote fraudulent crypto investments after gaining victims’ trust, a scheme known as pig butchering or phishing scams.

Court filings show the conspirators often initiated contact through social media platforms and dating apps, cultivating professional or romantic relationships before persuading victims to transfer funds into accounts controlled by the group.

“The Court’s sentence reflects the gravity of Li’s conduct, which caused devastating losses to victims throughout our country,” said Assistant Attorney General A. Tysen Duva, adding that authorities would “work with our law enforcement partners around the world to ensure that Li is returned to the United States to serve his full sentence.”

Related: Wallet tied to Infini exploiter resurfaces to buy Ether dip for $13M

Li is the first defendant to be sentenced. Eight other co-conspirators have pleaded guilty and await sentencing.

Li admitted that he and his co-conspirators tricked victims into transferring at least $73.6 million in funds to bank accounts associated with the defendants, including $59.8 million from US shell companies that laundered victim funds.

The sentencing comes more than a year after Li pleaded guilty to conspiring with others to launder funds obtained from victims through crypto scams and fraud, Cointelegraph reported in November 2024.

The investigation remains ongoing and is being led by the US Secret Service Global Investigative Operations Center, with assistance from Homeland Security Investigations’ El Camino Real Financial Crimes Task Force and the US Marshals Service, among other agencies.

Related: OpenClaw AI hub faces wave of poisoned plugins, SlowMist warns

Crypto scams see resurgence at the start of 2026

Crypto scams and phishing incidents saw an uptick in January, when scammers stole $370 million, the highest monthly figure in 11 months, according to crypto security company CertiK.

Notably, $311 million of the total figure was attributed to phishing scams, after a victim lost around $284 million due to a particularly damaging social engineering scam.

The $370 million marked the largest monthly loss since February 2025, when attackers netted around $1.5 billion in total value stolen, with the majority due to the $1.4 billion Bybit exchange hack.

Magazine: Meet the onchain crypto detectives fighting crime better than the cops