Deleveraging (Liquidation Cascade)

Deleveraging describes a rapid, forced reduction in leveraged positions, typically triggered when an adverse price move forces exchanges to close over-leveraged long or short positions. This shows up in the data as an abrupt open-interest contraction that coincides with an outsized price move — commonly called a liquidation cascade.

Bitcoin has recorded 46 deleveraging events, the most recent on 2026-02-05, identified from abnormal open-interest contractions under price stress.