Asia Morning Briefing: $20B Liquidation Shakes Market, Bitcoin Buoyed by Long-Term Demand

Crypto Markets Recover After $20B Deleveraging, Structural Demand Remains Strong

Crypto markets experienced their largest-ever leveraged liquidation, wiping out speculative positions but leaving long-term capital largely intact. Analysts at Glassnode and CryptoQuant note that steady whale accumulation, rising USDT supply, and ongoing ETF inflows continue to underpin the market despite short-term volatility.

Even after the massive $20 billion sell-off, the market’s structural demand remains resilient, signaling that long-term investors are holding firm.

Strong Foundations Support Stability

CryptoQuant reports that while short-term momentum has softened, large holders continue to accumulate, and fiat liquidity is still building. The USDT supply has grown by nearly $15 billion in the last 60 days, marking the fastest increase since January, while U.S. spot Bitcoin ETF inflows have reached $3.5 billion.

Glassnode also highlights these trends, indicating that capital remains in the system despite the liquidation, suggesting that the sell-off primarily removed speculative risk rather than long-term conviction.

Contrasting Market Perspectives

The two firms differ in tone and outlook:

• Glassnode frames the sell-off as a structural purge, stripping out speculative excess and forcing traders into defensive positions. Funding rates have halved, perpetual CVDs turned negative, and options traders are paying higher premiums for downside protection. Glassnode sees the market as digesting losses and rebuilding confidence, rather than expecting an immediate rebound.
• CryptoQuant offers a more constructive view, highlighting $115,000—the on-chain realized price for traders—as a key level. A sustained move above this threshold could mark the start of a new bullish phase, backed by growing stablecoin liquidity and continued whale accumulation.

The difference reflects a broader market divide: a cautious reset versus a potential inflection point.

Transition to Equilibrium

Both firms suggest the market is moving from excess to equilibrium. Capital continues flowing through ETFs and stablecoins, but positioning remains defensive, and confidence will take time to rebuild. Bitcoin’s next move—whether a rebound or extended consolidation—will hinge on how quickly structural demand converts into fresh risk-taking.

Market Highlights

BTC: Bitcoin dropped to around $112,700 after briefly dipping below $110,000. Profit-taking and renewed U.S.-China trade tensions weighed on risk assets, though prices stabilized after Fed Chair Jerome Powell indicated that the central bank is nearing the end of its tightening cycle.

ETH: Ether traded near $4,101, down 3.7%, with open interest falling to its lowest level since May. Profit-taking accelerated after rejection near $4,270, though CME traders and ETF inflows continue to provide institutional support.

Gold: BlackRock’s Evy Hambro forecasts gold could surpass $4,200 as paper currencies are repriced against real assets. Bank of America projects gold at $5,000 and silver at $65 by 2026, citing fiscal deficits, strong investor demand, and structural trends favoring real assets, while acknowledging short-term consolidation risks.

Nikkei 225: Asia-Pacific markets opened higher on Wednesday, with Japan’s Nikkei 225 up 0.3%, despite U.S.-China trade tensions and President Trump’s “retribution” rhetoric keeping volatility elevated.