Crypto Market Dynamics in 2025: A Year of Liquidations and Regulatory Impact

By: Eva Baxter

The year 2025 has proven to be a tumultuous period in the world of cryptocurrency, marked by significant forced liquidations in the crypto derivatives market, amounting to approximately $150 billion. Despite its alarming appearance, this figure primarily represents the notional value of futures and perpetual positions closed due to insufficient margin, highlighting the structural vulnerabilities of a derivatives-driven market. With an astounding aggregate turnover of $85.7 trillion, crypto derivatives took center stage, dictating market liquidity and pricing.

A pivotal moment in the year was the macroeconomic shock introduced by geopolitical tensions. On October 10, 2025, President Donald Trump's announcement of 100% tariffs on Chinese imports triggered a risk-off sentiment across global markets, leading to ripple effects in the cryptocurrency realm. The stringent economic policies exacerbated the crypto market's inherent vulnerabilities due to high leverage and crowded positioning. As spot prices fell, a cascade of liquidations ensued, driven by margin calls that exchanges could no longer sustain, further highlighting the frailty of existing market structures.

Throughout 2025, Bitcoin maintained a robust technical and on-chain market structure, yet faced hurdles arising from shifting macroeconomic dynamics. The period highlighted a disconnect between inherent market strength and external economic pressures such as elevated real yields and restricted Federal Reserve policies. Despite an initial rally, Bitcoin's price struggled to break through macro-imposed ceilings, indicating a market bound by external constraints. The ongoing evolution of Bitcoin and other crypto prices will be shaped by these complex interactions as they move into 2026.

The concentrated nature of the top four trading venues—Binance, OKX, Bybit, and Bitget—played a crucial role in these developments, illustrating the significant impact of liquidity distribution. With limited market breadth, the October meltdown demonstrated the dangers of venue concentration as liquidation waves created synchronous pressure across these platforms, revealing the need for broader market infrastructure advancements. These insights underscore the importance of diversified exchanges and risk management strategies to mitigate future disruptions in the volatile landscape of crypto derivatives.