Bitcoin’s Selloff Was Real. The Leverage Story Is More Complicated.

Bitcoin was trading around $80,000 on October 29, 2026, after another bruising stretch. The easy explanation was that leveraged longs had crowded into the market, price slipped, and the resulting liquidations pushed it lower. That explanation is partly right. The interesting part is where it stops being sufficient.

What stands out to me is the contrast between the violence of the overnight move and the positioning that followed it. A clear pocket of forced selling appeared around 01:00–03:00 UTC. Yet over the broader observation window, open interest on two perpetual-futures venues ended higher, not lower. The market had experienced a liquidation event without completing an unambiguous, market-wide leverage reset.

That distinction matters. A liquidation spike tells us something about how a move happened. It does not, by itself, tell us whether the next move will be lower, whether weak hands have already been cleared, or whether the selling has created a durable opportunity in the other direction.

The price chart was bearish. The positioning was less straightforward.

At one OKX spot snapshot near 12:29 UTC, BTC-USDT traded at 80,042.4 USDT. The venue’s trailing 24-hour range was roughly 79,709.5–81,797.5 USDT. A separate CoinGecko snapshot placed bitcoin around $79,821, down approximately 1.3% over 24 hours and 3.5% over seven days. These are different snapshots and market definitions, not interchangeable closing prices.

The broader technical backdrop was soft. A dated secondary market analysis put the 50-day moving average near $81,923, above spot, while its 200-day moving average was near $73,113. Its 14-period RSI was about 43, and its MACD characterization was bearish. I read that as evidence of near-term weakness inside a still more constructive longer-horizon trend—not as a mechanical forecast.

There was also a plausible counterweight to the bearish narrative: reported U.S. spot bitcoin ETF net inflows of $110.3 million, $176.0 million and $137.3 million on October 26, 27 and 28, respectively. The three-day total, $423.6 million, suggests demand had not disappeared. But daily ETF flow estimates do not establish who was buying in the derivatives market at 01:00 UTC, and they cannot explain the intraday sequence on their own.

Positive funding did not mean a healthy bullish market

The first complication appeared in the perpetual-futures basis. In 99 synchronized, completed hourly observations of OKX BTC-USDT spot and BTC-USDT-SWAP, the perpetual contract traded at a persistent discount to spot. Over the last 24 matched hours, the average closing basis was −4.27 basis points, ranging from approximately −5.75 to −2.91 basis points.

At the same time, 29 of the 30 available historical funding settlements were positive. The average was about +0.00709% per settlement; the most recent settled rate was lower, at approximately +0.00338%. These are per-settlement values, not annualized yields.

That combination deserves attention. Positive funding often gets summarized as “longs are crowded.” But a perpetual trading below spot while longs continue to pay funding is not a clean picture of euphoric directional demand. Funding depends on venue-specific mechanics, and the relationship between funding and observed basis can diverge over short windows. It is safer to say that the market retained a cost of long exposure even as the traded contract reflected pressure relative to spot.

The overnight drop left actual liquidation evidence

The decisive evidence came from aligning hourly open interest, taker buy/sell notional and liquidation events. Between 01:00 and 03:00 UTC on October 29, Hyperliquid recorded approximately $12.34 million of BTC long liquidations. The first hour alone accounted for $7.04 million, alongside $83.87 million in net aggressive selling.

That is stronger evidence than the familiar claim that falling prices plus positive funding must mean a long squeeze. The liquidation records identify forced long closures. The taker-flow data identify the direction of marketable order pressure. They do not prove every aggressive sell was a new short, or that every price change was caused by liquidations.

The second hour is especially revealing. Another $5.30 million in long liquidations occurred, yet net aggressive flow flipped to roughly +$22.69 million. In other words, buyers were already absorbing some of the selling while liquidations were still being recorded. A cascade and a counterflow can coexist in the same hour.

Across the four hourly buckets beginning at 00:00 UTC, Hyperliquid’s taker sell notional exceeded taker buys by $77.60 million. The same period contained $12.34 million in reported long liquidations. The figures describe different parts of the same market episode and should not be added together as if they were distinct losses.

Lighter provided an independent venue-level check. It recorded roughly $231,755 in total BTC liquidations across the 01:00 and 02:00 hourly buckets, though the retrieved aggregate did not split those liquidations by long and short. Its reported BTC open interest declined about 3.97% between the 00:00 and 03:00 hourly snapshots. Hyperliquid’s BTC-denominated open interest fell about 0.68% across the same snapshots.

Then the open interest came back

Here is the part that complicates a one-directional bearish story: across the wider 24-hour snapshot sequence, Hyperliquid BTC open interest rose approximately 1.55%, and Lighter’s reported open interest rose approximately 1.57%. Both measures fell during the overnight selloff, then recovered.

I would not call that an all-clear. Nor would I call it proof that new shorts were taking over. Open interest records the number or size of outstanding contracts, not the motive of each participant. When OI rises, fresh positions have been opened on both sides of a matched futures trade. Determining which side initiated the risk, and whether the participants were hedging, requires additional evidence.

The pattern is consistent with a market that was partially deleveraged during a sharp fall and then attracted renewed positioning. That can precede another unstable move, but it can also accompany price stabilization. The direction is not contained in OI alone.

The cross-market evidence cuts both ways

Market-wide estimates added context, but not a single clean answer. A contemporaneous third-party report put BTC perpetual open interest across 38 venues near $30.5 billion, down about 3% over its rolling 24-hour window. A separate Binance estimate showed roughly $7.7 billion in BTC OI, up around 0.5% while price fell. Those figures can coexist because venues differ, windows roll, and the underlying instruments and valuation conventions are not necessarily identical.

Similarly, a 13-exchange tracker reported approximately $72.6 million in BTC liquidations over a rolling 24-hour window as of 11:36 UTC, with about 73.7% attributed to longs. That corroborates the direction of the localized evidence, but it cannot be summed with the Hyperliquid and Lighter event totals: exchange coverage and time windows overlap.

A reported $51 million burst of crypto liquidations around 01:30 UTC provides another clue about the intensity of the episode, but it covered crypto assets more broadly, not just bitcoin. I regard it as context rather than a BTC-specific statistic.

What would make me change my mind?

My interpretation is conditionally bearish to neutral over the next 24 hours to seven days, not because the liquidation figures guarantee further losses, but because the market remained vulnerable to renewed leverage-driven instability after a sharp decline. That is a statement about risk structure, not a directional probability estimate.

A renewed test of the roughly $79,600–$79,700 area would be more concerning if it arrived with negative taker delta, expanding short-side positioning and another burst of long liquidations. Conversely, a sustained hold of that area, improving aggressive buy flow and stable open interest would strengthen the case for absorption and stabilization. A recovery above the low-$82,000s would further challenge the near-term bearish interpretation; $84,400 was an additional resistance reference in the dated technical commentary.

Neither scenario should be confused with a tested strategy. There is no point-in-time backtest here, no executable signal specification, no out-of-sample validation, and no justified win probability. The 30-day directional outlook remains inconclusive. A separate secondary estimate of 31% annualized 30-day realized volatility offers scale for potential movement, but does not establish a normal return distribution or reliable tail-risk bound.

The larger lesson: forced selling is not the same as exhausted selling

Crypto commentary often treats liquidation totals as a verdict: either the bulls have been wiped out, or the market is about to spiral. Both claims ask the data to do too much. A liquidation print is a record of a forced event. A taker-flow imbalance shows who crossed the spread. Open interest shows outstanding exposure. Funding shows the cost of maintaining a side of a perpetual contract. Each is informative; none is a substitute for the others.

On October 29, those measures told a coherent but qualified story. Bitcoin weakened toward $80,000. Long liquidations intensified around the overnight break. Aggressive selling helped drive the move, and at least some leverage came off. Then buying appeared within the liquidation window, while open interest recovered over the broader day. ETF inflows and longer-horizon trend references offered counterevidence to the idea of a universally one-sided market.

I think the most important conclusion is not that bitcoin must fall again. It is that the selloff had a verifiable mechanism, while its aftermath remained unresolved. The next decisive evidence will come from whether renewed exposure is absorbed by genuine demand—or becomes the fuel for the next forced unwind.