Largest Bitcoin Leverage Unwind in Nearly a Year Triggered by Iran-Israel Tensions

Bitcoin derivatives traders were still on edge, even as BTC’s price rebounded above $105,000 for the first time since Friday.

Bitcoin was recently changing hands at about $105,500, a 2.3% gain over the past 24 hours, according to crypto data provider CoinGecko.  Markets have been rallying on the news of an Iran-Israel ceasefire—even if President Donald Trump profanely expressed his frustration that both countries had reportedly already violated the truce.

The S&P 500 gained 1.15% on the day, roughly mirroring the Dow Jones Industrial Average’s 1.22% climb. The Nasdaq Composite, which is heavily weighted toward technology and growth-oriented companies, rose 1.46% as the session neared closing.

Bitcoin dipped below six figures over the weekend, triggering more than $700 million in liquidations, as the U.S. launched missile strikes against Iran nuclear facilities.

Although Trump said he’s brokered a ceasefire, by Tuesday morning derivatives traders were still spooked.

“In the past 24 hours, notional open interest in BTC perps has shrunk by 17,394 BTC, marking the sharpest decline in open interest since the yen-led global market crash on August 5, 2024,” wrote K33 Head of Research Vetle Lunde in a report shared with Decrypt.

Lunde added that, the quick leverage unwind has reduced notional perp open interest below 260,000 BTC for the first time since early May.

That big draw down in open interest was a sign that traders were de-risking, Lunde wrote. The Fear & Greed Index remained firmly in greed territory, at a 65, but traders still seemed reluctant to add risk as they fretted over whether the ceasefire would hold.

“The current low-leverage environment mirrors levels last seen in April and suggest more stable price action in the short term,” Lunde  wrote. That’s notable considering the upcoming monthly Bitcoin futures expiry on Friday, June 27.  Derivatives traders use options contracts—crypto and otherwise—to bet on future price movements.

Some of those contracts have weekly or monthly expiration dates. Monthly expiries usually fall on the last Friday of the month.

“We expect the focus to transition toward [Trump’s budget and tariffs] in the weeks ahead,” Lunde wrote, “headline risks and uncertainties are poised to expand.”

Bitcoin Volatility Index, as tracked by crypto derivatives exchange Derebit, has sunk to 39.15. That’s the index’s lowest level since October 2023.

Wintermute’s OTC desk said in a note shared with Decrypt that traders don’t appear to expect huge price swings from Bitcoin heading into Friday’s option expiry.



“Flows skew neutral with straddle/call selling around 105K and short puts at 100K (27 Jun),” the analysts said, meaning that derivatives traders expect Bitcoin to stay near the $105,000 price.

But they also noted that while Bitcoin implied volatility remains low, short-dated implied volatility on the contracts expiring this week is still high because of geopolitical tensions. The Wintermute analysts also noted that there’s some bullish sentiment coalescing around Bitcoin options with July and September expiries, suggesting they expect the current uncertainty to settle soon.

Edited by James Rubin