How crypto-native leverage drove Bitcoin sell-off while ETFs barely flinched
JPMorgan attributes the latest Bitcoin (BTC) and Ethereum (ETH) sell-off to crypto-native leverage slightly than institutional exits, noting that spot ETFs and CME futures absorbed minimal pressured promoting while perpetual futures markets confronted sharp deleveraging throughout each property.
Bitcoin fell 13.1% from $122,316 on Oct. 3 to $106,329 by Oct. 17, while perpetual open curiosity dropped from roughly $70 billion to $58 billion on Oct. 10. This $12 billion decline alerts pressured liquidations slightly than orderly place exits.
Farside Investors’ knowledge exhibits that Bitcoin spot ETFs recorded $70.4 million in net outflows focused on Oct. 14, 15, and 16, minimal in comparison with the size of the worth transfer and the leverage flush in derivatives markets.
Ethereum noticed much more extreme deleveraging relative to its market measurement. Perpetual open curiosity fell from roughly $28 billion to between $19 billion and $20 billion on Oct. 10, representing a $9 billion to $10 billion drop.
Ethereum spot ETFs recorded $668.9 million in net outflows throughout Oct. 9, 10, 13, and 16, almost 9.5 instances Bitcoin ETF outflows, with concentrated redemptions on Oct. 10 and Oct. 13.
Despite the bigger institutional response in Ethereum ETFs, JPMorgan concluded that perpetual futures deleveraging drove value motion in each property, with ETF flows exhibiting “little pressured promoting” relative to the derivatives cascade.
The knowledge assist the financial institution’s thesis. Ethereum’s open curiosity declined by roughly 35%, while Bitcoin’s fell by roughly 17%. However, each property skilled a coordinated sell-off on Oct. 10 as leverage unwound throughout crypto-native venues.
| Metric | Window (UTC) | BTC | ETH | Notes |
|---|---|---|---|---|
| US spot ETF internet flows (US$m) | Oct 3–16, 2025 | +3,406.9 | +745.9 | Sum of Farside day by day “Total” for every date; Oct. 17 exhibits no entry. |
| CME futures OI variation | Oct 9 → Oct 10, 2025 | ~flat to low-single-digit dip | down; heavier than BTC | Coverage signifies CME BTC OI stayed broadly secure through the flush, while ETH noticed extra unwinding; actual day by day CME OI deltas aren’t revealed. |
| Aggregate perp OI change (notional) | Oct 10–11, 2025 (24–48h) | ≈ −40% | ≈ −40% | Market-wide deleveraging throughout perpetuals per Kaiko/JPMorgan; aligns with contemporaneous reporting. |
Perpetual flush mechanics
Perpetual futures exaggerate strikes as a result of leverage forces trades. When costs break, margin ratios slip, and exchanges liquidate under-margined positions with market orders that hit skinny books and set off reflexive cascades.
Cross-margin amplifies the dynamic, as collateral marked to market shrinks because the asset falls, forcing accounts that appeared protected to breach upkeep thresholds and add extra pressured movement.
Funding charges supply the quickest inform. During a down flush, perpetuals sometimes flip to sustained damaging charges with the perpetual buying and selling at a reduction to the spot index.
The flip arrives when funding grinds again towards zero while the perpetual premium or low cost closes, ideally with value stabilizing on rising spot quantity slightly than perpetual exercise alone.
Open curiosity gives the second pillar. A pointy drop in mixture open curiosity alongside the sell-off means leverage left the system as an alternative of rotating to new shorts.
Bitcoin’s 17% decline and Ethereum’s 35% decline in open curiosity each level to real deleveraging.
A constructive rebuild is sluggish and spot-led. Prices get better or stay on the base stage while open curiosity rises modestly, funding stays close to flat, and the perpetual foundation stays tight.
A sturdy backside after a perpetual flush seems to be like damaging funding reverting towards zero, the perpetual low cost closing, open curiosity resetting and rebuilding step by step, and the futures curve lifting again into gentle contango.
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