Crypto’s 10/10 Trauma: Did Traders Really Deleverage Before the Anniversary?

Crypto Leverage Reaches Crisis Point as Traders Deleverage Ahead of Anniversary

Risk Assessment

Crypto traders have taken on more borrowed money ahead of the 10/10 anniversary, not less, leaving them exposed to potential losses. This is a stark contrast to the claims of fear of a repeat that have been circulating. In reality, leverage has actually increased, with over $1 billion in bets forcibly closed in 24 hours. This is a classic example of the 'PTSD' phenomenon, where traders are so afraid of a repeat that they take on more risk.

Market Sentiment

The market sentiment is characterized by greed, with funding rates and fear gauge holding steady. Deribit's Bitcoin funding rate stood near 7.1% annualized this week, against 26.9% before the 2025 crash. OKX's funding averaged about 3.5% over the past seven days. Alternative.me's Fear and Greed Index scores sentiment from zero to 100, currently reading 64, or 'greed'.

Leverage and Exposure

Over $1 billion in bets were forcibly closed in 24 hours, with over $930 million coming from bets on rising prices. This is a stark contrast to the claims of fear of a repeat, and highlights the dangers of taking on too much leverage. The Estimated Leverage Ratio, which compares open bets with the Bitcoin held on exchanges, has climbed from about 0.234 on October 3 to roughly 0.256 on October 8.

Funding Costs

Funding costs have fallen far below 2025 as the fear gauge holds at greed. Deribit's Bitcoin funding rate has decreased, while OKX's funding has averaged about 3.5% over the past seven days. This suggests that the market is becoming more bullish, but also more crowded.

Conclusion

The situation is dire, with traders facing potential losses of up to $75,000. It is essential for traders to take a step back and reassess their risk management strategies. The 'PTSD' phenomenon is a real and present danger, and traders must be cautious not to repeat the mistakes of the past.