Published: Tuesday, September 23, 2025 · 3:15 AM | Updated: Tuesday, September 23, 2025 · 3:15 AM
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(Bloomberg) — A more than $1.5 billion round of liquidations has again underscored the fragility of cryptocurrency markets, unfolding without a clear trigger and leaving option prices pointing to more volatility ahead.
The selloff — one of the largest of the year after months of speculative rallies — forced leveraged bets in Ether and other tokens to be unwound and has left traders braced for further swings. Options contracts that pay out on sharp moves are in heavy demand, underscoring febrile sentiment across the digital-asset landscape, while stocks and other risk assets rally afresh.
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Ether, the second-largest cryptocurrency, was down about 0.9% in Asia Tuesday morning, after falling as much as 9% in the previous session when nearly half a billion dollars in bullish wagers were wiped out. Bitcoin was trading 0.8% lower.
“The market has been consolidating after the sharp pullback yesterday, but the mood still feels rather nervous,” said Caroline Mauron, co-founder of Orbit Markets. A move below $110,000 in Bitcoin and $4,000 in Ether could lead to a further sell-off, she said.
The broad aftershocks are visible in Bitcoin’s options market. The biggest wagers for options contracts expiring at the end of the month are clustered at two extremes: protection against a slide below $95,000 and wagers on a surge above $140,000, according to data from Deribit. Both positions are large enough to show that traders expect turbulence, not stability.
Roughly $23 billion of Bitcoin and Ether option contracts are due to expire on Friday, one of the largest ever, according to Deribit data, adding to the cautious sentiment.
Short-term wagers have become popular, reflecting a view that sudden squeezes or forced sales will drive the next moves. These out-of-the-money contracts are cheaper to buy but only pay off if prices swing dramatically, making volatility itself the trade.
Much of this year’s price buildup was fueled by crypto treasury firms — public companies that raised money to accumulate assets. Token purchases by the companies have slowed as falling share prices limited their ability to raise capital for fresh buying. The pullback has weakened demand and added to pressure behind the latest plunge in digital assets.
“Broadly, we see the latest leg lower as a contained deleveraging event for crypto,” said Griffin Sears, global head of derivatives at FalconX. “However, the increased leverage in crypto relative to a year ago still leaves ample opportunity for outsized moves in crypto.”
Signs of that leverage are clear in perpetual futures, a type of derivative contract favored by crypto traders. Open interest — the number of outstanding positions — has surged on Binance over the last few months, with Ether seeing a boom in speculative activity with day traders playing a visible role.
“Ethereum’s sharp decline reflects excessive leverage meeting thin liquidity rather than any fundamental catalyst, with Ethereum reverting to its historical role as a higher-beta expression of digital-asset sentiment during periods of stress,” said Chris Newhouse, director of research at Ergonia, a firm specializing in decentralized finance.
Still, Bitcoin’s volatility has remained more contained this year, reflecting its deeper markets and growing role as a portfolio hedge for mainstream investors. With the Federal Reserve cutting interest rates, industry analysts expect inflows to resume even if crypto treasuries slow their purchases.
“Overall we expect the trend in Bitcoin to follow equities and macro risk more closely,” Sears said.
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