Crypto Leverage Unwinds and Liquidity Tightens
In this report:
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Smart Contract Risk Re-Emerges — The Balancer Exploit
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DeFi Risk Climbs as Stablecoin and Lending Stress Deepen
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Caution to Collateral: Banks Advance Toward Crypto Integration
Market Update
October’s euphoric rally gave way to one of the most violent deleveraging episodes since 2021. BTC’s surge to around $125k and ETH’s push to around $4.5k were abruptly reversed by the Oct. 10 liquidation cascade, which erased tens of billions in open interest and drained liquidity across CEX and DeFi venues. From there, market structure weakened further—front-end vols stayed bid, skew remained put-heavy, and funding flipped negative as traders de-risked across the board.
Through November, selling pressure persisted as ETF…
