Bitcoin’s price plummeted to $88,500 on Feb. 25, triggering $1.48 billion in liquidations across the futures market. This significant correction, which sent Bitcoin well below the short-term holder realized price, was partly sparked by macro uncertainty following Trump’s proposed tariffs.

While the initial reaction to the tariffs sent Bitcoin to $91,000, altcoins saw an even steeper decline. The futures market felt the brunt of this volatility, as evident in the sharp declines in open interest across exchanges. Open interest, which represents the total number of outstanding futures contracts, is a key indicator of market leverage and activity.

Across all exchanges, OI fluctuated notably: it stood at $57.63 billion on February 24 at 01:00, rose slightly to $57.95 billion by Feb. 25 at 01:00, and then dropped to $55.71 billion by 11:41 later in the same day. This $2.24 billion decline within hours reflects a rapid reduction in market leverage as traders closed positions or were liquidated en masse.

The impact varied significantly across exchanges. CME, which primarily serves institutional investors, recorded an 8.38% drop over 24 hours, reducing its OI to $14.87 billion. This decline suggests that institutional traders, who typically hold larger, less leveraged positions, reacted swiftly to the price drop by closing or reducing their exposure.

In contrast, Binance, the exchange with the highest single liquidation yesterday, saw a much smaller OI decline of -0.22% over the same period, bringing its OI to $11.29 billion. Despite absorbing massive liquidations, Binance’s resilience in OI points to its predominantly retail user base, where traders may have been more willing to maintain or open new positions amid the volatility.

Coinbase experienced the most dramatic percentage drop in OI at -41.10%, reducing its OI to just $110.17 million. Although Coinbase holds a small market share in futures, this sharp decline indicates that its users — likely retail and institutional traders with lower risk tolerance — reacted strongly to the market stress, possibly through panic selling or forced liquidations.

The significance of Coinbase’s 41% drop in OI lies in what it reveals about retail sentiment. Despite its modest $110.17 million in outstanding contracts and a mere 0.19% market share, the magnitude of the decline suggests that Coinbase’s futures market was heavily leveraged or subject to intense selling pressure.

The platform’s extremely low OI-to-24-hour volume ratio of 0.0042—the lowest among major exchanges — indicates minimal trading activity relative to OI, likely exacerbating the impact of liquidations. This behavior suggests a loss of confidence among retail traders on the exchange, a segment that typically stabilizes the market during corrections.

The disparity between CME and Binance further highlights structural differences in the futures market. CME’s -8.38% OI drop, despite lower liquidation volumes compared to Binance, reflects the cautious nature of institutional traders. These players likely closed positions to mitigate risk, as evidenced by CME’s high OI-to-24-hour volume ratio of 1.3552, indicating robust trading activity relative to OI.

In contrast, Binance’s -0.22% OI decline, coupled with a lower OI-to-24-hour volume ratio of 0.3004, suggests that while many over-leveraged retail positions were liquidated, others remained or were replaced, which tempered the overall OI reduction.

Binance’s resilience shows we could see sustained retail interest, which could provide some stability to the market in the near term. However, CME’s larger proportional decline signals institutional wariness, which may slow any potential recovery if large players continue to pull back.

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