The Binance hack broke a 14-for-14 pattern: bitcoin's leverage went up, not down

Bitcoin is about 4% below where it stood when the Binance hack hit on Thursday evening, and leverage is higher than it was. In the six years our gauge has run, a drop that size from a stretched market had never done that.

Our leverage gauge (Plus) starts in September 2020. Since then bitcoin has closed down 4% or more on 14 days with the gauge already at 70 or higher. All 14 times the gauge was lower by the end of the next day, by a median of 28 points. This time it went from 82 to 85, and it reads 89 now, the highest since 22 September.

A drop like this is supposed to clear the market. This one left it more stretched.

What changed since the hack

Forced selling was small. About $442M of bitcoin longs have been liquidated (Plus) since the hack, roughly 1.5% of the $30.5B in open interest (Plus). That open interest is down just 0.6% in dollars, so counted in coins it's up 3.6%. New positions opened faster than old ones closed.

The new longs look small. Our account ratio (Plus) counts every account the same, whatever its size, and it rose on Binance, Bybit and OKX alike.

The largest traders went the other way. The top trader ratio (Plus) weighs Binance's biggest traders by what they hold, and it fell. Orders of $1 million or more have net sold (Plus) $1.77B of bitcoin perpetuals since the hack, $705M of it in the first hour. In spot, orders that size net sold just $96M.

Two other parts of the gauge are doing the rest. Open interest against market cap is at the top of its one-year range. Funding scores 98 of 100, though that's less dramatic than it sounds: about 0.01% every eight hours is an ordinary rate, and it only looks high against a year of weak funding.

Who sold on-chain

Mostly newer coins. On Friday 12,681 BTC moved onto exchanges, about 1.6 times the 30-day average. But the coin days destroyed by those deposits (free) were the lowest since 18 July, at 20,034 against an average near 92,700. Plenty of coins, not many old ones. Binance paused deposits for a few hours overnight, which may hold that figure down a little.

Recent buyers are feeling it. They sent 1,556 BTC to exchanges at a loss on Friday, on our short-term holder chart (Pro), about three times their 30-day average. Their coins in loss (Pro) went from 1.49M BTC at Wednesday's close to 2.45M at Friday's, and all holders together now have 7.89M BTC underwater. The share of supply in profit (Plus) is 53%, the lowest since 18 August.

October closes tonight down about 7%, the worst October in our price record, which starts in 2017. The only other red ones were 2018 and 2025, and November fell 37% and 18% after them. Two cases prove nothing, but they won't cheer anyone up.

What it does and doesn't say

It isn't a call on direction. The gauge has ended a day at 85 or more with bitcoin down 3% or more on the week four times before. A week later bitcoin was up in three of the four. Two weeks later it was down in three of the four. At smaller drops the pattern isn't perfect either: with falls of 3% or more, the gauge cooled in 24 of 27 cases.

What our backtest does show is size. After extreme readings, bitcoin's median 72-hour move is 3.8%, against 2.5% for all hours. The fuel for a big move is still there, and this drop didn't burn it.

What to watch

• $74,100. Our max pain chart (Plus) puts the densest band of estimated long liquidations there, about 4% below the price. Within 5% of the price, $266M of longs sit below against $122M of shorts above.
• $75,904 and $75,449. Recent buyers' average cost and Strategy's average cost both sit on the way down.
• Sunday and Monday. Binance is aiming to start reopening withdrawals on Sunday and to publish fresh proof of reserves by Monday. Its published wallets (free) have held about 645,000 BTC, flat since Thursday night, and that's the first place a rush for the exit would show.
• The gauge. The free leverage gauge page shows the reading. A real flush would take it down fast.

How we measure it

Both ratios are the venues' own published figures, sampled every five minutes. The account ratio is the mean of Binance, Bybit and OKX, and the percentages turn that ratio into a share of accounts. The $1M+ flow comes from our own trade-by-trade capture and starts on 20 October; open interest starts on 14 October. "Before the hack" is the hour ending 20:00 UTC on 29 October, the last full hour before the block at 20:20 UTC. "Now" is the hour ending 13:00 UTC on 31 October. The coin count divides open interest by that hour's price. The gauge is scored hourly against bitcoin's own past year, with no look-ahead. The 14 days compare its last hour before the fall day opened with its last hour on the next day.