A crypto analyst argued Bitcoin's (BTC) recent crash was driven by derivatives market liquidations rather than spot selling, claiming the 21 million supply cap no longer constrains price discovery through financial markets.
The analysis comes as Bitcoin dropped from $81,500 to $60,000 within five days, triggering over $2.6 billion in position liquidations.
CoinGlass data shows derivatives volume consistently exceeds spot volume, with futures and perpetual swaps accounting for the majority of Bitcoin trading activity even during heightened volatility.
This structural shift means short-term price direction increasingly depends on leverage positioning and liquidation flows rather than direct coin purchases.
Derivatives Volume Dominates
Bitcoin perpetual futures open interest declined from approximately $5 billion to $3.6 billion during the recent selloff, according to Bybit analytics.
Over $800 million in leveraged positions were liquidated in a single 24-hour period as prices fell below $70,000, with additional waves pushing total liquidations above $2.6 billion for the week.
The analyst's claim about Bitcoin's supply cap is misleading. The on-chain 21 million limit remains unchanged. However, multiple derivative products can reference the same underlying Bitcoin, creating what the analyst termed "synthetic float expansion" where one coin simultaneously backs ETF shares, futures positions, perpetual swaps, options exposure, and broker loans.
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Market Structure Questions
CoinGlass reported derivatives activity grew to "several multiples" of spot market volume throughout 2025, maintaining that pattern during both rallies and corrections. This creates conditions where price discovery no longer originates primarily from spot flows but from derivatives positioning, funding stress, and forced deleveraging.
The shift mirrors traditional commodities like gold and silver, where derivatives markets dominate price formation despite underlying physical scarcity.
Whether this represents a permanent structural change or a temporary leverage cycle remains debated among market participants, though recent liquidation data supports claims that derivatives positioning drives short-term volatility.
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