In 2025, the crypto futures market experienced over $154 billion in forced liquidations, with daily losses averaging $400-500 million. Leverage ratios, funding rates, and risk mechanisms contributed to the crisis. Long positions suffered the most during the largest single liquidation event in crypto history, wiping out over $19 billion in positions.

The year 2025 highlighted the dangers of excessive leverage in crypto futures trading. Leverage ratios reached record highs, with traders operating at 10x to 100x leverage. The fragility of the market structure was exposed, leading to massive liquidations and cascading margin calls.

Funding rates served as crucial signals in 2025’s derivatives markets, indicating market positioning and imbalance. Positive funding rates signaled excess bullish demand, while negative rates reflected bearish overcrowding. Traders often misinterpreted funding signals, leading to significant losses during volatile periods.

Auto-deleveraging (ADL) became a reality in 2025, forcibly closing profitable positions to restore solvency. ADL triggered mass liquidations during the October crash, prioritizing platform survival over individual fairness. Critics argue that ADL is outdated and does not scale to modern trading environments, leading to total account wipeouts for traders.

The $154 billion lost in 2025 was a result of ignoring market mechanics, particularly around leverage, funding rates, and risk mechanisms. The lessons learned emphasize the importance of understanding market structure and avoiding over-leverage to prevent catastrophic losses in the future.

Read more at Yahoo Finance: 3 Crypto Futures Trading Mistakes That 2025 Brutally Exposed