Crypto Market Pullback: Leverage Unwinds
Posted: Mon Aug 18, 2025 7:29 am
The cryptocurrency market faced a sharp decline of nearly 3% in the last 24 hours, marking a continuation of weakness that has persisted through the week. This downturn was largely driven by heavy liquidations, leveraged positions being unwound, and profit-taking across altcoins. The sharp correction came after an extended rally met strong resistance, triggering a cascade of selling pressure across multiple tokens.
Derivatives markets played a central role in amplifying the drop. Billions in open interest had built up during the rally, and when prices failed to hold key resistance levels, more than $100 million in positions were liquidated in a short span. The majority of these were long positions, highlighting that overleveraged traders were caught off guard by the sudden reversal. With open interest continuing to climb, volatility has become a dominant force, making cautious positioning increasingly important.
Bitcoin itself dropped around 2.3% to hover near $115,000, while Ethereum suffered a larger decline of about 5%. Altcoins were hit even harder, with many mid-cap and emerging tokens sliding between 6% and 8% as traders locked in recent gains. Coins like PROVE, HYPE, and ZORA were among those leading the losses, largely due to profit-taking and weakening long-to-short ratios. As a result, Bitcoin’s market dominance inched higher, signaling that capital is flowing back to the relative safety of the largest cryptocurrency.
Despite the pullback, many analysts view this correction as a healthy recalibration rather than a bearish reversal. Technical indicators suggest momentum has cooled, but support levels remain intact. Traders are closely watching whether Bitcoin can hold above $115,000, as this may set the tone for the next market move. For now, caution and disciplined risk management remain the watchwords.
Derivatives markets played a central role in amplifying the drop. Billions in open interest had built up during the rally, and when prices failed to hold key resistance levels, more than $100 million in positions were liquidated in a short span. The majority of these were long positions, highlighting that overleveraged traders were caught off guard by the sudden reversal. With open interest continuing to climb, volatility has become a dominant force, making cautious positioning increasingly important.
Bitcoin itself dropped around 2.3% to hover near $115,000, while Ethereum suffered a larger decline of about 5%. Altcoins were hit even harder, with many mid-cap and emerging tokens sliding between 6% and 8% as traders locked in recent gains. Coins like PROVE, HYPE, and ZORA were among those leading the losses, largely due to profit-taking and weakening long-to-short ratios. As a result, Bitcoin’s market dominance inched higher, signaling that capital is flowing back to the relative safety of the largest cryptocurrency.
Despite the pullback, many analysts view this correction as a healthy recalibration rather than a bearish reversal. Technical indicators suggest momentum has cooled, but support levels remain intact. Traders are closely watching whether Bitcoin can hold above $115,000, as this may set the tone for the next market move. For now, caution and disciplined risk management remain the watchwords.