- Bitcoin leverage flush erased $990M in open interest within two hours as BTC fell below $65K support.
- U.S. spot Bitcoin ETFs recorded $316M in net outflows,a sign of shifting short-term supply dynamics.
- Market cap dropped near the $50B mark before stabilizing, as forced selling and cautious dip-buying dominated the market.
Late sunday night Bitcoin dropped below $65,000. This drop came after Trumps announcement of rates increase to almost 15 per cent. This saw a massive $990 million liquidation shock in just two hours.
Open interest collapsed to $19.5 billion and the total crypto market cap fell 2.9% in 24 hoursto $2.33 trillion. Current trading volume has reached $87.25 billion and Bitcoin is trading near $65,929, extending short-term volatility.
Leverage Cascade Accelerates Bitcoin Leverage Flush
BTC sliced through the $65,000 psychological level and tagged the $64,200 zone marking its lowest point since early February.
The speed of the decline drew immediate attention across derivatives markets. As stops triggered below support, overleveraged long positions were forced to close.
This created a cascade of liquidations within a compressed window. Data shared across trading desks on X showed open interest collapsing to nearly $19.5 billion.
That figure represents almost half of the January 14 peak near $38.3 billion. Nearly $990 million in open interest was wiped out in roughly two hours.
Such compression typically signals that speculative leverage has been forcefully cleared. Funding rates also normalized as excess positioning exited the market.
When leverage resets at this pace, volatility often cools temporarily. Short-term positioning becomes more balanced after aggressive flushes.
ETF Outflows Add Pressure During Fragile Price Action
From February 16 to February 20, U.S. spot Bitcoin ETFs recorded $316 million in combined net outflows. While modest relative to total assets, the shift occurred during weakening price momentum.
Total net assets across spot ETFs stood near $85.3 billion at the time. Spot ETFs require actual Bitcoin transactions to reflect investor flows.
Therefore, sustained outflows translate into incremental spot selling pressure. During fragile technical periods, even moderate withdrawals can influence short-term supply dynamics.
Several ETF tracking accounts posted flow summaries on X during the week. The withdrawals followed Bitcoin’s drift from the upper-$60,000 range toward lower support levels.
Flow reversals appeared reactive to volatility rather than predictive. Compared to prior inflow surges exceeding $1 billion in single sessions, the $316 million figure remains contained.
The scale was a tactical repositioning and not a broad institutional retreat. However, continued outflows caused attention and need for close monitoring.
Market Cap Shock Reflects Forced Selling Event
The 24-hour market capitalization chart showed a controlled decline before the Bitcoin leverage flush accelerated. Total market cap hovered near $1.36 trillion during the early session.
It then drifted lower in a gradual distribution pattern. Later on February 22, capitalization fell sharply from $1.34 trillion to $1.29 trillion causing a $50 billion Rapid losses.
Analysts noted that such size typically aligns with derivatives-driven liquidations. Later on, buyers stepped in, and sustained movement above the $1.33 trillion to $1.34 trillion range.
Failure to reclaim that zone leaves room for additional volatility. For now, the Bitcoin leverage flush has reset positioning while leaving traders alert to further shifts.