Leverage Burns, Solana Earns: $2 Billion Liquidation Cascade Splits the Market

Bitcoin dipped below $100,000, the first time since June before rebounding to $101,000, triggering over $2 billion in forced liquidations as the crypto market faced its most violent deleveraging event since September.

Why it matters:

This isn't just another correction. It's a structural shift. Overleveraged longs got liquidated ($1.6 billion worth), institutional flows reversed, and for the first time in months, capital is rotating away from bitcoin (BTC) into yield-generating alternatives like Solana.

The 37-day US government shutdown, Fed hawkishness, and whale distribution are converging into a perfect storm that's testing market resilience at the psychological $100,000 level.

Driving the news:

The liquidation wave peaked on November 4-5, 2025, wiping out over $2 billion in futures contracts, with long traders accounting for nearly 80% of losses at $1.6 billion, according to CoinGlass data reported by CoinDesk. Over 303,000 traders were liquidated as bitcoin briefly touched $99,966—its lowest level since June 23.

Ether (ETH) traded below $3,400, turning negative year-to-date after starting 2025 near $3,353. Total crypto market capitalization fell to $3.5 trillion—its lowest level in over a month.

The Crypto Fear & Greed Index fell to 21, signalling "Extreme Fear," its lowest reading in weeks.

Zoom in:

The selloff wasn't random. It was systematic.

Whales holding 10 to 10,000 BTC sold 38,366 coins since October 12—a 0.28% decline in holdings that control 68.5% of bitcoin's supply. Meanwhile, retail "shrimps" (wallets under 0.01 BTC) accumulated 415 BTC during the same period.

BlackRock's IBIT led the institutional exodus with $186.5 million in outflows on November 3, the sole driver of total Bitcoin ETF redemptions that day. Ethereum ETFs fell by $135.7 million, with BlackRock's ETHA responsible for 60% of outflows.

Yes, but:

Solana ETFs are swimming against the tide. While Bitcoin and Ethereum ETFs lost capital, Solana spot ETFs recorded $70 million in net inflows on November 3—their fourth consecutive day of positive flows. Bitwise's BSOL ETF alone attracted $417 million in its first week, outpacing every crypto ETF globally and ranking 16th among all ETFs by weekly flows.

Between the lines:

This is capital rotation. Institutional money isn't leaving crypto. It's hunting yield. The Solana ETFs offer 7% staking rewards in a risk-off environment where Treasury yields hover near 5%. That's compelling. Bitcoin offers narrative; Solana offers cashflow. When volatility spikes and conviction wavers, yield wins.

The 37-day US government shutdown (now the longest in US history) has stalled regulatory progress and frozen economic data releases that traders use to front-run Fed moves, according to CoinDesk. Markets hate uncertainty. This is maximum uncertainty.

Large clusters of long liquidations can signal capitulation and potential short-term bottoms. Traders should watch where liquidation levels are concentrated—these zones of forced activity can act as near-term support or resistance.

Takeaway: Bitcoin tested the critical $100,000 psychological level, broke it, then bounced to $101,000, but with $2 billion in liquidations marking one of the largest deleveraging events since September, positioning remains fragile. If BTC breaks decisively below $100,000, expect another leg down toward $95,000. Right now, leverage is toxic, whales are selling, and smart money is chasing yield. The next few sessions will determine if this bounce holds or if more forced selling lies ahead.

The Shutdown That Won't End: How Washington's Gridlock Is Draining Crypto Liquidity

Why it matters:

The US government shutdown entered its 37th day and is now the longest in American history. Federal agencies are furloughed, economic data is frozen, and crypto legislation is stalled. The longer this drags, the deeper the uncertainty cuts into risk assets.

What we found:

The shutdown began October 1, 2025, after Congress failed to agree on a spending bill. Polymarket odds suggest it could extend through Thanksgiving or beyond, potentially reaching 61 days, according to The Market Periodical. That's 7.5 times longer than the historical average.

The SEC's review of crypto ETFs has ground to a halt. Multiple issuers—including Fidelity and Canary Capital—filed updated S-1 forms for spot crypto ETFs using a procedural shortcut that bypasses active SEC approval, reports CoinDesk. Four crypto ETFs went live last week using this loophole. More could follow by mid-November if the shutdown persists.

Fed Chair Jerome Powell's hawkish tone at the October 30 FOMC meeting dampened hopes for a December rate cut, even after delivering a widely expected 25-basis-point cut. "I am nervous about the inflation side of the ledger, where you've seen inflation above the target for four and a half years and it's trending the wrong way," Fed Governor Austan Goolsbee said on November 4, per Invezz.

Meanwhile, the Fed conducted a $29.4 billion repo operation on November 2—the largest since 2020—to inject liquidity into the banking system. The DXY (US Dollar Index) surged above 100 for the first time since August 1, putting pressure on non-yielding assets like Bitcoin.

How it works:

Government shutdowns block the release of employment and inflation data that the Fed relies on for policy decisions. Without this data, markets can't position ahead of rate moves, amplifying volatility. Crypto, as a high-beta risk asset, feels this uncertainty first and hardest.

The shutdown also delays the Senate's crypto market structure bill, which passed the House in July. Senate Banking Committee Chair Cynthia Lummis initially planned to advance the bill by late September. That timeline is now indefinitely postponed.

Yes, but:

Some think the shutdown's crypto impact is overstated. "Progress on digital asset policy hasn't hit pause," Summer Mersinger, CEO of the Blockchain Association, told CoinDesk. Industry officials continue meeting with senators, and Ron Hammond of Wintermute puts the odds of a market structure bill passing before the 2026 midterms at 80-90%.

Takeaway:

Washington's paralysis is bleeding into market structure. No data, no clarity, no conviction. Until the government reopens and rate cut expectations stabilise, expect volatility to stay elevated.

The Scoop

Whale wins big: An anonymous trader dubbed the "Anti-CZ Whale" netted $36 million by shorting Bitcoin, Ethereum, and Solana during the November 3-4 crash on Hyperliquid, reports BeInCrypto. Total profits nearing $100 million.

James Wynn's redemption: After 45 liquidations in two months, controversial trader James Wynn is finally profitable, sitting on $66,465 in unrealised gains, according to blockchain analytics firm Lookonchain.

Fed liquidity injection: The Federal Reserve's $29.4 billion repo operation on November 2 was the largest since 2020, signalling policymakers are attentive to liquidity stress even if they're not ready to pivot dovish.

To Watch

November historically delivers gains in 9 of the past 12 years for bitcoin, with an average return of 42.5%, per Coinglass. But October 2025 was Bitcoin's first red October in seven years. Will seasonality save the bulls, or will leverage, shutdowns, and whale selling override the pattern? Watch the $100,000 level. Bitcoin bounced to $101,000 after testing $100,000—if it breaks below, the next stop is $95,000. If it holds, we might still see fireworks before Thanksgiving. Analysts maintain the long-term outlook remains constructive despite near-term turbulence.

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