The first half of 2025 was marked by a record increase in open interest on crypto derivatives, but without slipping into the leverage excesses that characterized previous cycles.
According to the CoinGlass 2025 semi-annual report, the numerous episodes of massive liquidations that occurred in February and April played a key role in cleaning up the market and re-establishing a sustainable balance. In this article, we examine how the leverage was managed more healthily and how the liquidations contributed to stabilizing the sector.
More prudent crypto leverage: a sign of maturity
Despite the overall open interest on derivatives growing to record levels (over $70 billion for Bitcoin and $30 billion for Ethereum), the average leverage of operators never got out of hand.
CoinGlass attributes this maturity to:
greater liquidity and market depth,
better margin management by exchanges,
increasing institutional participation favoring less speculative strategies (source: CoinGlass).
Liquidations cleaned up the excesses
The contained leverage was not by chance: it was favored by liquidation episodes that eliminated overly aggressive speculative positions.
Record liquidations: February
On February 3, 2025, the market experienced the largest day of long liquidations of the year:
over $2.23 billion in positions closed in 24 hours,
$1.88 billion from long positions,
more than 729,000 positions liquidated.
This event was triggered by the surprise announcement of US tariffs, which sparked panic in the market.
New episode: end of February
On February 25, amid ongoing macroeconomic tensions and negative economic data, another $1.57 billion in liquidations hit an already fragile market, pushing BTC below $90,000.
The “revenge rally” of April: short squeeze
After the cleaning of long leverage, the market reacted with a surge at the end of April:
on April 23, BTC rose by 7% in a few hours, to $93,000,
over $600 million in short positions liquidated.
This short squeeze helped to consolidate prices and reduce bearish pressure.
Why are liquidations healthy?
Forced liquidations free the market from excess leverage, reducing the risk of a spiral of excessive sales.
As CoinGlass explains:
they bring leverage back to more sustainable levels,
improve the quality of margin reserves on exchanges,
strengthen the confidence of institutional investors.
Funding rate and leverage: balance achieved
The funding rate also confirmed the return to balance:
remained positive for most of the semester, but contained.
brief negative phases during moments of panic, then subsided.
absence of excessive peaks indicating a more rational market.
Crypto transparency: Bybit’s initiative
In the first half of 2025, Bybit introduced a new public API for real-time dissemination of liquidation data.
CoinGlass highlights that this move contributed to greater transparency and a better ability for investors to manage risk.
Lessons for crypto investors
The episodes of the first half of 2025 teach that:
a healthy leverage is essential for long-term stability.
liquidations are part of the market’s physiology.
monitoring funding rate and leverage ratio helps prevent mistakes.
The first half of 2025 marked a step forward for the maturity of the crypto market: a record open interest, more prudent leverage, and liquidations that cleaned up the excesses.
Investors who learn to manage leverage sustainably will be better positioned to navigate the next phases of the cycle.
