On October 23, between $431 million and $455 million in long positions were liquidated across crypto derivatives within 24 hours, according to CryptoTicker, which cites CoinGlass. On October 8, Investing.com reported about $1.14 billion in futures liquidations in one day, most of it longs. The sources use different windows and methods, so read these as rough sizes. They still show how quickly forced selling adds up when a lot of leverage sits on one side of the market.
What is a liquidation cascade?
A liquidation cascade is a chain of forced sales, where each sale pushes price far enough to trigger the next one. Leveraged longs are funded with borrowed margin. When price falls far enough that the margin no longer covers the exchange's maintenance requirement, the exchange closes the position with a market order. That order is a sale into the order book, so it adds to the decline that caused it. If the new price reaches the next group of leveraged longs, the process repeats. Allium's explainer walks through the sequence step by step.
Why is the first wave rarely the one that matters?
Coverage of a liquidation day usually leads with the first wave, because it is the easiest number to report. The more useful question is whether a second wave forms at all.
The first wave depends on how much leverage is stacked near the current price. The second depends on where the next cluster of liquidation prices sits relative to the new price. If that cluster is close, the loop continues. If the gap is wide, the move usually stalls, and the day reads as a flush rather than a cascade.
So a large first wave with a wide gap below can settle faster than a smaller one that lands on top of dense clusters.
What happens when the insurance fund runs out?
CoinGlass's 2025 annual report puts combined long and short liquidations on October 10, 2025 at more than $19 billion. It says the true figure was likely higher once late disclosures from some platforms were counted. Longs made up roughly 85% to 90% of the total.
The more useful part of the report comes after the first wave. When liquidation volume outruns the insurance funds that cover losses, exchanges can auto-deleverage (ADL), forcibly closing profitable positions on the other side. The report describes how this broke a common hedge. Traders holding a short BTC position against long altcoins lost the short leg and were left holding the altcoins alone. During that event, ETH's maximum drawdown was roughly 10% to 15%, while many altcoins fell 80% or more.
The lesson is that a hedge is only as sound as the exchange's liquidation engine. Two offsetting positions can look neutral on a screen and turn directional once one leg is forced out.
Can you tell whether the next cluster is close enough?
Only with current positioning data. A historical report explains how the mechanism works, but it cannot show where the next cluster sits today. Price still decides whether a cluster gets hit.
How do you watch for a cascade as it forms?
OpticAlpha's crypto liquidations page covers BTC and ETH. The heatmap plots where leveraged positions cluster by price and leverage tier, from 5x to 100x, and it is redrawn as new data arrives. The live feed lists each liquidation with its symbol, side, size and price, and whale alerts flag large prints. Read together, the heatmap shows where the next cluster sits, and the feed shows whether the first wave is landing and which side it is hitting.
Neither view predicts whether price reaches a cluster. What they show is where the leverage is and whether forced selling has already started, which is the difference between a flush and a loop.
Track live liquidations and leverage clusters at opticalpha.net/terminal. 14-day free trial, no credit card required.