A sudden market sell-off can feel like a wave — and on Nov 3, 2025 the crypto world watched a painful one crash through leverage-heavy positions. Reports show roughly $400 million in long positions were liquidated within 24 hours as Bitcoin and Ethereum slid, triggering a cascade of margin calls across futures and perpetual contracts. This article explains what happened, why it matters, and — most importantly — what traders and investors can do to survive the next washout.
What actually happened? The anatomy of the $400M washout
Rapid drop, rapid liquidations
According to exchange and market-data summaries, the move began as Bitcoin dipped below key intraday support (around $107,500), which forced automatic liquidations of long positions. Ethereum’s comparable weakness amplified the pressure: both assets together accounted for the majority of the 24-hour wipeout, with tens of thousands of traders affected. Coalesced data from exchanges reported roughly $400M in liquidations, with Bitcoin and Ethereum responsible for major shares of that total.
Why liquidations cascade
Liquidations occur when leveraged positions (traders borrowing to amplify returns) get margin-called because prices move against them. When many traders use high leverage, a relatively small price move can force mass liquidations — which themselves push price further, creating a feedback loop. During this event, exchanges and price-feeds saw a rapid uptick in forced exits that intensified downward pressure.
Who bore the brunt: Bitcoin, Ethereum — and retail traders
Bitcoin: the shock that triggers the rest
Bitcoin’s slip under technical support levels acted as the initial trigger. While BTC’s absolute dollar moves can be smaller percentage-wise than thinner altcoins, its outsized market cap means BTC liquidations can still be enormous in dollar terms — and often set the tone for the whole market.
Ethereum: leverage + derivatives complexity
Ethereum’s derivatives markets (including options and perpetuals) are deep — but that depth also makes the network of leverage complex. Reports showed Ethereum accounted for significant liquidation value (Ethereum long liquidations in the tens of millions), adding to the torrent of forced selling and margin stress.
Retail traders suffer most
Data suggests retail traders — who more often use high leverage and smaller margin buffers — were the most affected. When market moves suddenly, under-collateralized retail positions get flushed first. Business media noted that hundreds of thousands of traders exited positions during recent large deleveraging events, underscoring how crowded long books can be.
Broader context: is this one event or part of a trend?
This washout fits a pattern seen through 2025: markets that rally on liquidity and optimism can become vulnerable when macro or sentiment shocks occur. Headlines and concurrent liquidity events (including corporate treasury moves and concentrated institutional trades) have amplified volatility this year, so large liquidation episodes are possible even in broadly bullish cycles. Barron’s and other outlets have flagged similar deleveraging events earlier in the year where billions were wiped out in short windows — a reminder that scale can escalate quickly.
What this means for the market (short and medium term)
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Short term: Expect volatility and potential for overshoot to the downside as forced sales dry up. Support levels tested during washouts can become springboards for relief rallies, but price action is likely choppy.
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Medium term: If the fundamental catalysts (institutional flows, macro liquidity, regulatory news) remain supportive, this could be a painful but temporary purge. If structural cracks persist (eg, concentrated leverage or exchange instability), consolidation or deeper corrections are possible.
Actionable strategies for traders and investors
Whether you’re an active trader or a long-term investor, here are practical steps to reduce risk and use volatility to your advantage.
1. Revisit leverage — reduce or avoid it
High leverage magnifies gains AND losses. After washouts like this, re-examine whether using leverage matches your risk tolerance. For many retail participants, lowering or avoiding leverage is the single most effective risk control.
2. Use stop management (not just market emotion)
Set logical stop-losses based on technical structure or volatility, not fear. Consider position sizing rules such as limiting any single trade to a small percentage (1–2%) of capital.
3. Monitor funding rates and open interest
Extreme long funding (when longs pay shorts) and rising open interest can signal crowded trades. When you spot these conditions, be cautious: a small catalyst can trigger outsized liquidations.
4. Keep an eye on liquidations dashboards and on-chain signals
Real-time liquidation trackers (e.g., Coin glass, exchange feeds) and on-chain flows (wallet movements, exchange inflows) provide early warning signals of stress. Use them as part of a broader risk dashboard.
5. Diversify exposure & consider hedges
If you hold large spot positions, consider hedges (short futures or options) sized to your risk tolerance. Hedges reduce emotional pressure and give you room to act rationally during spikes in volatility.
6. Maintain cash/stable coin dry powder
Volatility creates buying windows. Holding some dry powder lets you take advantage of dislocations rather than being forced to sell into panic.
How institutions and exchanges change behavior after washouts
Large washouts tend to prompt exchanges and institutional desks to temporarily tighten risk limits, increase margin requirements, or adjust funding rate mechanisms to stabilize markets. Institutional participants might also rebalance exposure or deploy block trades; press coverage often follows with deeper analysis into whether forced liquidations reveal systemic vulnerabilities. Expect some short-term friction in derivatives markets until the dust settles.
Final thoughts: washouts are painful — but they reveal truths
Liquidation tsunamis are unpleasant for leveraged traders — especially retail participants — but they also weed out excessive risk and reveal where speculative concentration exists. For disciplined market participants, the event is a reminder to be humble, size positions responsibly, and trust risk controls over hope.
If you trade, treat the $400M washout as a concrete signal: manage leverage, diversify, and plan for volatility. If you invest, use the episode to reassess allocation and avoid behavior that relies on perpetual liquidity or effortlessly rising markets.