Bullish Bets Blow Up as Bitcoin and AI Winners Slide, Wiping Out Over Half a Billion in Leveraged Positions

Sudden slide snaps long positions and rattles two hot corners of the market

A sharp, broad sell-off swept through Bitcoin and top AI-related stocks, knocking over an outsized pile of leveraged long bets in a short window. The move erased more than half a billion dollars of bullish exposure across crypto derivatives and equity margin positions, with the wildest activity concentrated inside a few hours late in the trading day. Traders who had piled on leverage on the idea of continued upside found themselves forced out as prices reversed, turning what looked like steady gains into a string of painful stop-outs.

The real-world impact was fast and visible: dozens of futures order books flipped from balanced to one-sided, funding rates swung, and several large accounts posted cascade liquidations that amplified the slide. For crypto and equity traders who’ve grown used to quick rallies, the day was a reminder that megatrend narratives — like AI and ETF-driven Bitcoin demand — can unwind just as quickly when liquidity thins.

How many traders were hit, where losses piled up and who took the biggest hits

Across major derivatives venues, data compiled from public order feeds and on-chain trackers shows that well over one hundred thousand individual positions were forcibly closed in the span of roughly three hours. The lion’s share — roughly four out of five liquidations — came from long positions, meaning traders betting on higher prices were the ones driven out. Margin calls and auto-liquidations clustered on the biggest crypto exchanges and a handful of prime brokerage desks that seat heavy AI-equity leverage.

Notable large liquidations included multi-million-dollar longs in Bitcoin perpetual contracts and several large single-stock margin positions tied to leading GPU makers. Some accounts saw sequential liquidations where an initial forced sale pushed price lower and triggered more stop-outs from other leveraged accounts. This cascade effect is common when many players use similar leverage and stop levels.

The time window — a concentrated few hours — matters because short-lived squeezes like this tend to hit thin books the hardest. When a handful of big orders move through, the market can gap, and automated risk engines then pull the leash on exposed accounts very quickly.

Why both Bitcoin and AI names moved together: flows, ETFs and crowded positions

The sell-off didn’t come from a single, obvious headline. Instead, it looked like a confluence of pressures: a modest macro shock that pricked stretched sentiment, a bout of profit-taking out of Asia, and large outflows or high redemption demand in a few ETFs that added selling pressure to both crypto-linked products and AI-focused equity baskets.

On the crypto side, the new wave of spot Bitcoin ETFs has concentrated flows into a few funds. That concentration can be helpful in calm markets, but it also creates a feedback loop when those funds face redemption or need to rebalance — they add sizeable sell orders into an already soft market. At the same time, on-chain signals showed elevated transfers to derivatives exchanges in the hours before the drop, suggesting more leveraged longs were building into the move.

For AI equities, many quant strategies and hedge funds have similar, crowded exposures to a handful of chipmakers and software names. These positions had been propped up by optimistic earnings beats and AI hype; when liquidity began to dry, algo-driven funds and margin lenders reduced exposures simultaneously, creating an exaggerated downside correlation between crypto and AI stocks that day.

Aftershocks for derivatives, ETFs and cross-asset links

The immediate market structure impacts were clear. Crypto funding rates flipped as shorts briefly earned payments from longs and then swung back as the market found a new balance. Exchanges typically raised margin requirements for volatile coins and single-stock futures in the hours after the move, which can slow a bounce because it discourages re-leveraging.

For ETFs, the episode highlights the trade-off between scale and concentration. Big ETF share classes can absorb ordinary flows, but sudden large redemptions or rebalances force market makers to sell into thin markets. That dynamic increases short-term correlation between ETFs and underlying spot prices, and it raises the chance that equity and crypto sell-offs can feed into each other during bouts of stress.

Practical takeaways for traders: avoid the mistakes that led to mass liquidations

The biggest recurring error in this episode was over-reliance on high leverage inside crowded trades. When many accounts stack similar directional bets, a small price move can cascade into larger forced sales. Keep leverage modest on positions that are popular industry-wide, and assume the worst if liquidity dries suddenly.

Second, watch funding rates and short-term open interest as early warning signs. Rapid increases in long open interest paired with unbalanced funding payments often precede painful corrections. Finally, diversify execution venues and consider staggered stops rather than single hard stop levels that can be hunted in thin markets.

Where the numbers came from and what to watch in follow-up data

The liquidation totals and attribution in this report come from aggregating public exchange liquidation feeds, on-chain transfer data, and large-trade prints from equity venues. Methodology counts forced closes visible in exchange logs and attributes them by instrument type and the side (long or short) when that information is disclosed.

Important caveats: not every forced close is publicly disclosed in the same way across venues, and some prime brokerage liquidations are netted off-platform and show up later in reporting. Figures are therefore provisional and may be revised as more trade-level data becomes available. Traders should watch changes in open interest, ETF creation/redemption notices, and exchange margin calls for the clearest real-time signals after an event like this.

Sources

• coindesk.com
• coindesk.com
• indices.coindesk.com
• coindesk.com
• coindesk.com
• coindesk.com