Crypto
Bitfinex Warns of a Third October Liquidation Wave: Futures Open Interest Rose 4.3% While Bitcoin Fell, and New Longs Pay 6% to 9% Funding
Bitfinex analysts said on October 19 that bitcoin futures open interest rose 4.3% between October 12 and 15 even as the price dropped, with the shorts squeezed the week before replaced by leveraged longs paying annualised funding of 6% to 9%, the same setup that preceded the month's two earlier flushes. A break below $79,821 would open a band of $77,600 to $80,400; a recovery above $84,400 would put the average spot ETF buyer back in profit. Bitcoin traded near $82,000 on Tuesday.
Bitcoin has been liquidated twice this month, and the exchange that publishes the most detailed weekly notes on its own order flow thinks the conditions for a third round are back. In its Bitfinex Alpha report, cited by crypto.news on October 19, the exchange's analysts wrote that futures open interest rose 4.3% between October 12 and October 15 while the price of bitcoin fell. "Short positions were squeezed last week when BTC rose, and were subsequently replaced by leveraged longs paying annualised funding rates of six to nine percent, recreating conditions similar to those preceding both October flushes," the note said.
The spot market is not providing the demand to absorb that leverage. US spot bitcoin ETFs recorded about $228.4 million of net outflows in the week of October 12 to 16, according to Farside data, a second straight weekly loss, though 66% smaller than the $678.9 million withdrawn the week before; the week had inflows of $175.7 million on Tuesday and $5.1 million on Thursday against a $261.4 million outflow on Wednesday, the CPI day. Bitfinex estimates net 30-day apparent demand at roughly negative 50,000 BTC. Its analysts also note a change in who holds the coins: wallets that bought this year now account for 33% of the realised value held by whales, up from 18% at the start of 2026, with an average cost basis near $77,000, which is where forced selling would begin to hurt.
The levels in the note are specific. Bitfinex expects $81,300 to sit near the middle of the week's range and calls the bearish scenario more likely than a sustained recovery: a break below $79,821, the October 15 low that has now held three times, would be followed by selling into an accumulation band of $77,600 to $80,400. On the other side, a recovery above $84,400 would put the average investor in the spot ETFs back in profit, which is the level at which the exchange expects the funds' flows to turn. Bitcoin's 20-day correlation with the Nasdaq 100 is 0.78, so the chip stocks' direction this week will matter at least as much as the funding rate.
Tuesday's tape was in the middle of all of it. Bitcoin closed Monday's daily candle at $81,938 on Binance after a high of $83,158, and traded between $81,200 and $82,272 in the first five hours of October 20, near $82,000 at the European open; ether was near $2,408 after a low of $2,373, close to the $2,391 and $2,382 supports that CryptoRank has flagged. Other analysts quoted by crypto.news were less alarmed: ViaBTC's Jeff Ko described a recovery toward $82,000 to $83,000 after the brief dip under $80,000, HashKey's Tim Sun expects range-bound trading, and DWF Labs pointed out that bitcoin's 2.47% weekly decline was smaller than the Nasdaq's 4.43%.
The point of a funding rate is that it tells you who is paying to hold a position. When longs pay 6% to 9% a year to stay long while spot demand is negative, the position is being financed, not bought, and financed positions are the ones that get sold for you. That is what happened on October 10 and October 15. Whether it happens a third time depends on a 10-year yield at 5.15%, a Fed in blackout and a week of technology earnings that bitcoin now tracks with a 0.78 correlation.