The first half of 2025 was marked by a record increase in open interest in crypto derivatives, but without falling into the excessive leverage that characterized previous cycles.
According to CoinGlass’s 2025 Mid-Year Report, the numerous episodes of massive liquidations that occurred in February and April played a key role in clearing the market and restoring a sustainable balance.
More Prudent Crypto Leverage: A Sign of Maturity
Even though overall open interest in derivatives has grown to record levels which is over $70 billion for Bitcoin and $30 billion for Ethereum, thus, traders’ average leverage has never gotten out of control.
CoinGlass attributes this maturity to:
- greater liquidity and market depth,
- better margin management by exchanges,
- growing institutional participation that prefers less speculative strategies (source: CoinGlass).
Some of this shift can also be seen in the rise of more streamlined, minimalist crypto infrastructures such as Bitcoin Hyper, a project that gained quiet traction during the first half of the year. It emphasizes on-chain efficiency and prioritizes utility over hype, aligning with the broader move away from excessive speculation.
Bitcoin Hyper’s growth, though modest in scale, reflects an appetite for tools designed for a leaner, more sustainable market ecosystem.
The Sales Cleared the Excesses
The contained leverage is not a coincidence: it was favored by episodes of liquidations that eliminated overly aggressive speculative positions.
Record sales: February
On February 3, 2025, the market saw its most significant long-position sell-off of the year. Within just 24 hours, over $2.23 billion in positions were closed, including $1.88 billion from long bets and more than 729,000 liquidations. This sharp correction was triggered by a surprise announcement of new U.S. tariffs, which rattled investor confidence and sent markets into panic mode.
New episode: End of February
Just weeks later, on February 25, worsening macroeconomic conditions and weak economic indicators fueled another wave of liquidations, this time totaling $1.57 billion. The already fragile market saw Bitcoin dip below the $90,000 mark, deepening the correction.
April’s Revenge Rally: Short Squeeze
By late April, with excessive long leverage cleared out, the market was primed for a rebound. On April 23, Bitcoin surged 7% within hours, reaching $93,000. This rapid climb triggered a short squeeze, wiping out over $600 million in short positions. The squeeze helped stabilize prices and ease downward pressure, marking a potential turning point in market sentiment.
Why are Sales Healthy?
Forced liquidations help the crypto market stay healthy by removing too much risk. When traders use too much borrowed money (leverage), it can lead to sudden price drops. Liquidations stop this from getting worse by clearing out risky positions.
As explained by CoinGlass, this process helps bring leverage down to safer levels, makes sure exchanges have better margin reserves, and helps big investors feel more confident about joining the market.
In this kind of market, we’re seeing signs that investors are starting to care more about real use cases rather than just hype. A good example is Bitcoin Hyper. Its presale has raised between $2.2 million and $2.5 million.
This strong start shows growing interest in Layer-2 projects that focus on actual on-chain use, not just token price speculation. This shift may lead to a stronger and more stable market as more investors look for long-term value over quick profits.
Funding Rate and Leverage: A Market Finding Balance
The funding rate data confirms the market’s gradual return to equilibrium. While it stayed mostly positive throughout the semester, levels remained moderate and contained, avoiding the aggressive spikes typically associated with overheated speculation.
During brief episodes of panic, such as the February sell-offs, funding briefly dipped into negative territory. However, these phases were short-lived, and the rate soon normalized, reflecting renewed market stability.
Importantly, the absence of extreme peaks in both funding and leverage usage signals a more rational and disciplined trading environment. Rather than chasing unsustainable long or short positions, market participants appear more cautious and responsive to macroeconomic signals.
Lessons for Crypto Investors
The first half of 2025 showed that the crypto market is growing and becoming more stable. There was a rise in open interest, more careful use of leverage, and liquidations that helped reset the market.
These events reminded investors of a few key points: using leverage wisely supports long-term success, liquidations are a normal part of how markets work, and keeping an eye on funding rates and leverage levels can help avoid problems. Those who manage leverage properly will be better prepared for the next parts of the market cycle.