Crypto’s $290bn weekend wipeout exposes fragile liquidity as risk appetite cracks across markets – Businessday NG

A bruising weekend slide erased nearly $290 billion from global crypto market capitalization, shining a harsh light on the market’s thinning liquidity just as investor appetite for risk faltered across asset classes. Bitcoin sank to about $74,674 and ether to $2,164—levels last seen between April and June last year—before both stabilized and recovered roughly one percent since midnight UTC.

Fragile liquidity meets a risk-off backdrop

The bounce has not dispelled anxiety about the market’s plumbing. Sparse weekend liquidity and elevated leverage appear to have magnified the move, turning a risk-off pivot into a swift liquidation cascade. The broader mood was cautious beyond crypto: U.S. equity futures slipped, with the S&P 500 down about 0.58 percent and the Nasdaq 100 off 0.85 percent in pre-market trading, while gold and silver retreated roughly 3.5 percent after notching record highs last week.

Derivatives spotlight: leverage bleeds out

Stress was most visible in derivatives. Total crypto futures open interest fell to roughly $108.94 billion, its lowest since April and less than half October’s $223 billion peak—evidence of a rapid drawdown in leveraged exposure. In the past 24 hours alone, more than $800 million in leveraged positions were liquidated, with longs bearing the brunt.

Open interest in bitcoin and ether futures declined by just over one percent and three percent respectively. By contrast, several altcoin contracts—including SOL, DOGE, SUI, ADA, and LINK—saw open interest rise, suggesting traders may be setting up or adding to short positions. Some pockets, such as ZEC, WLFI, TON, BCH, and XLM, showed net buying pressure based on cumulative volume delta, even as bitcoin and ether posted negative readings.

Futures gap hints at a near-term magnet

On the Chicago Mercantile Exchange, bitcoin futures opened sharply lower at around $77,730 versus Friday’s close near $84,105, leaving a price gap that traders often expect to be filled. That dynamic could act as a short-term magnet toward the $80,000 area, even if broader conditions remain fragile.

Options skew signals caution

Options positioning underscored persistent hedging demand. Interest in $75,000 bitcoin put options has swelled to match appetite for $100,000 calls, while heavy positioning in $80,000 and $70,000 puts points to ongoing demand for downside protection. In plain terms, traders are still paying up for insurance against further declines.

Altcoins take the hardest hit

Low liquidity exaggerated price swings in altcoins, where the bulk of the pain played out. More than $300 million in ether-linked positions were liquidated over the past day. Weekly losses were steep across several names: Dash fell about 25 percent, while OP, SUI, XTZ, and ether each dropped more than 20 percent week over week.

There were isolated bright spots. HyperLiquid’s HYPE jumped more than 40 percent over the week and climbed 13 percent from Saturday’s low, buoyed by active trading alongside volatile precious metals markets. Jupiter’s JUP also staged a rebound, up roughly 7.9 percent since midnight UTC after sliding nearly 25 percent over the weekend.

Structural weak points, laid bare

The episode reaffirmed known structural vulnerabilities in crypto trading. Market depth tends to thin out on weekends when institutional activity slows. In that environment, a handful of large orders can knock prices through key levels, triggering forced liquidations that snowball as margin thresholds are breached—turning orderly declines into abrupt air pockets.

Traditional market watchers have also taken notice. Some commentators questioned the durability of bitcoin’s bullish base after the slide toward the mid-$70,000s, noting that a sustained defense of support near $73,000 and a quick reclaim of the $77,000 zone would be needed to set up another attempt at the low-$80,000s. They also warned of cross-asset spillovers if highly leveraged traders are compelled to raise cash by selling equities or metals, potentially deepening the broader risk-off tone.

What to watch next

• Liquidity and depth: Weekend gaps in market-making capacity remain a flashpoint. How quickly depth rebuilds will shape volatility.
• Leverage reset: The sharp contraction in open interest suggests a healthier base, but further deleveraging could extend price chop.
• Options hedging: Elevated put demand and skew toward lower strikes indicate lingering caution that could cap rallies.
• CME gap dynamics: A move toward the $80,000 area is possible if gap-fill expectations drive flows, though durability will depend on spot demand.
• Altcoin dispersion: Expect wider performance spreads as liquidity concentrates in majors and idiosyncratic catalysts drive outliers.

Bottom line: Bitcoin’s overnight stabilization may calm nerves, but the combination of thinned liquidity, ongoing hedging, and outsized altcoin losses points to a brittle confidence regime. In the near term, crypto’s direction may hinge less on spot buyers stepping in and more on how derivatives traders manage risk—and whether broader markets steady or extend their retreat from risk.