The Biggest Bitcoin Purge in 7 Months: Causes and Effects
Bitcoin broke its September lull this week, with $285 million in long position liquidations, totaling $1.6 billion in market-wide liquidations. According to data from crypto research firm K33, this is the fourth-largest Bitcoin liquidation event of 2025. It was the sharpest leverage purge in the digital asset market since February.
Last week, seven-day realized volatility in Bitcoin fell to just 0.6%, its calmest period since August 2023. K33 Research Director Vetle Lunde noted that this low volatility set the stage for leveraged trades, with one-way positions being liquidated in a sudden wave of selling. Looking at historical data, it has been observed that Bitcoin's 30-day returns are usually below average after major liquidations. During such periods, Bitcoin rises by 0.78% on average, compared to a normal return of 5.9% over 30 days.
The other asset hardest hit by liquidations was Ethereum. About 490 million dollars of long positions were closed. According to data from K33, Bitcoin's share of leverage fell from 47% in 2024 to 40% in 2025. In the last week, it has fallen to a record low of 32.7%. This shift is mainly due to increased interest in assets such as Ethereum and Solana. In addition, corporate treasuries' shift towards altcoin purchases and ETF approvals expected in mid-October are also important factors.
Institutional investors' shift towards altcoins is also evident in CME futures. In June, 82.6% of open positions were in Bitcoin, but this has now fallen to 57.9%. Ethereum, Solana and XRP contracts account for most of the remaining share. Vetle Lunde emphasized that this trend coincides with local peaks, increasing leverage in altcoins.
To summarize, the leverage cleanup in Bitcoin may create a temporary floor. However, historical data shows that such periods often result in poor performance. In contrast, the growing leverage risk in altcoins could set the stage for new market volatility.
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Bitcoin, Ethereum, altcoin, altcoin, price analysis, crypto market, support resistance, BTC fall bullish
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