BTC Current Affairs Security

Bitcoin's Underwater Longs Are Setting a Trap—And the Market Keeps Walking Into It

2026-10-25

Bitcoin's biggest leveraged long positions are looking increasingly fragile. Most of them are now sitting in unrealized losses, and if price weakness continues, the unwind could be ugly. Coinbase Markets has done the forensics: they looked at on-chain entry prices and found a precarious setup waiting to fall apart.

The average entry level for the largest concentration of net long Bitcoin positions? $81,993. Bitcoin is currently trading below that. Which means the traders who piled in at that level now have no margin of safety. Worse: 64% of net long notional exposure was opened above the current spot price. The majority of tracked bullish leverage is underwater.

The market wasted no time validating these fears. Over 24 hours ending October 24, the crypto market saw $481.25 million in total liquidations. Long positions took the hit hardest: $346.15 million gone. Bitcoin specifically suffered $95.06 million in forced closures, of which $85.90 million came from longs. Then came the real spike. When Bitcoin dipped briefly below $80,000, it triggered $404 million in long liquidations across crypto in just four hours, according to CoinGlass.

Here's how the trap works. When an exchange forcibly closes a leveraged long position due to insufficient margin, that closure becomes an automatic market sell order. Prices drop. The next cluster of thin positions gets hit. Then the next. It's self-reinforcing. That $81,993 entry zone isn't just a psychological level—it's a technical trigger. Break below it sustainably and you're looking at systematic deleveraging cascading through the market.

The options market is already pricing in the worst case. Bitcoin's 25-delta skew—demand for protective puts versus calls—was 11.3% for one-day expiry, 10.5% for one-week, 10.8% for one-month. Compare that to the one-year skew: 3.9%. Put options are carrying higher implied volatility than equivalent calls right across the board. Traders are hedging for near-term pain.

The real question Coinbase posed is this: do traders add to underwater positions in hopes of a recovery, or do they reduce exposure and cut their losses? Fresh buying pressure could theoretically reclaim the $81,993 entry zone and relieve the pressure on longs. But if weakness persists, forced liquidations multiply. Negative feedback loop. Self-fulfilling prophecy.

Two hundred and one thousand traders were caught in Saturday's liquidation wave alone. They're all weighing conviction against capital preservation in an environment where margin requirements leave almost no room for error. One bad move. One sustained dip. That's all it takes.

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