Stormrake - Insights #$20 billion liquidated

The Rake Review: December 2025

Wed, 31 Dec 2025 09:26:00 +1100

2025: A Year in Review

As people unwrap their gifts this holiday season, it's time to reflect on a year that didn’t go as many had hoped. While Bitcoin is likely to close 2025 in the red, it has been far from a wasted year. Quiet wins, foundational progress, macro shifts have quietly taken shape and may set the stage for what comes next. Compared to many other assets, Bitcoin may now be undervalued, not just relative to its own history, but within the broader macro environment.

Rather than the usual monthly Rake Review, we’re taking a deeper dive into the year that was.

January: Trump Returns

One of the biggest stories from 2024 became reality in January as Donald Trump was officially inaugurated and returned to the White House. The bullish sentiment surrounding his return saw risk on assets push higher, with Bitcoin setting its first all time high of the year just shy of $110K.

Optimism spread quickly. Trump introduced the Crypto Task Force within the SEC and Gary Gensler stepped down as chair. He was replaced by Paul Atkins, a long-time critic of Gensler's anti-crypto stance and far more favourable towards the space.

February: The Month of Rumours

The bullish tone continued, but headlines shifted. February was dominated by speculation and two major narratives emerged. First, rumours surrounding sweeping new tariffs from Trump's economic agenda began to circulate and started to weigh on risk markets. Second, the idea of a Strategic Bitcoin Reserve began to build. It was still unconfirmed, but momentum was growing.

March: Strategic Bitcoin Reserve Confirmed

March may go down as one of the most important months in Bitcoin’s history. The US Government officially announced the creation of a Strategic Bitcoin Reserve. While Bitcoin had previously been adopted by countries like El Salvador and Argentina, the involvement of the US brought a level of legitimacy the space had never seen.

This move did not just validate Bitcoin to institutions and retail investors. It integrated Bitcoin into global government strategy.

April: Markets Liberated

Tariff speculation finally turned into reality. April 3 became known as Liberation Day. Trump announced tariffs on 185 countries, with a base 10 % applied to most and higher rates for others. The result was a broad selloff across markets. Bitcoin fell to $75K and the S&P 500 also posted its yearly low.

The fear was short lived. Markets rebounded and Bitcoin kicked off a seven week bullish streak.

May: Sell in May and Go Away?

That phrase has been passed around for years, but it did not apply in 2025. Bitcoin extended its rally and set a new all time high at $112K. This came as US debt surged past $37 trillion and confidence in the traditional system continued to erode. Investors rotated out of the dollar and into hard assets, with Bitcoin one of the biggest beneficiaries.

June: Middle East Conflict

Just as momentum was building, geopolitical tensions flared. Conflict between Iran and Israel rattled risk markets. A brief pullback followed, but it did not last long.

By the end of H1, Bitcoin was up over 15 % for the year, the S&P 500 had gained 5.5 %, gold was up 26 % and silver had climbed 25 %.

July: Regulatory Wins and Momentum

With conflicts easing and tariffs temporarily paused, July saw another push higher. Bitcoin hit a new all time high at $123K.

The month was also defined by major wins on the regulation front. The first Crypto Week was held in Washington and three key bills passed through Congress — the GENIUS Act, CLARITY Act and Anti-CBDC Act. The GENIUS Act was signed into law, providing stablecoin regulation and clearer crypto guidelines. While not directly tied to Bitcoin, it gave broader confidence to the entire crypto space.

The first whispers of altseason began to surface.

August: Ethereum Runs and Executive Order Signed

Momentum carried through into August. Bitcoin pushed just above July’s high at $124K, but this time it was Ethereum that took centre stage.

Institutional accumulation was the dominant narrative. Spot ETF flows into ETH were at their highest since launch. Ethereum reached a new all time high just shy of $5,000, its first in nearly four years.

Another big win for Bitcoin came with an executive order that allowed digital assets to be included in 401K retirement accounts. A major step forward for adoption in the US.

September: Rate Cuts and Decentralised Momentum

September has historically been Bitcoin’s worst month. In 2025, price held steady, setting up a potential fourth quarter rally.

DeFi took the spotlight. Decentralised exchanges hit record volume. Hyperliquid continued to dominate until Aster arrived and quickly became a serious competitor.

Macro-wise, the US saw its first rate cut of the year. Signs that quantitative tightening was coming to an end, and liquidity was starting to return. A key turning point for risk markets.

October: New High and the 10/10 Crash

The month began with strength. Bitcoin hit a new all time high at $126K in the first week.

Then came October 10.

Trump issued a surprise tariff threat on China, this time at 100%. Markets sold off sharply. A stablecoin depegged on Binance, market makers were caught offside and Bitcoin crashed from $117K to $102K. Some altcoins dropped more than 80 % in less than 30 minutes.

Close to $20 billion was wiped in liquidations. Since then, Bitcoin has fallen over 30 % and is now red on the year. Meanwhile, the S&P 500 has recovered and gone on to set new highs.

November: Yen Pressure Returns

Source: https://www.tradingview.com/x/qB3DMMni/

The main story in November was once again Japan. Last year, it was a surprise rate hike. This year, it was surging bond yields that triggered another potential unwind of the yen carry trade, with both the 10-year and 30-year yields hitting their highest levels since the turn of the century.

Rising borrowing costs forced institutions to exit risk on positions, including crypto. Bitcoin came under pressure as a result.

Still, there was a silver lining. The US Federal Reserve officially announced the end of quantitative tightening. It did not spark a rally, but it laid the groundwork for future expansion.

December: Metals Take the Lead

Bitcoin was flat in December, with little interest in risk. The Fed cut rates, the BOJ raised them, and the effects cancelled each other out.

Instead, all eyes were on commodities. The Fed announced it would begin buying $40 billion in Treasuries. The first taste of quantitative easing. Gold continued to climb to new highs on daily closes, and silver surged 45 % for the month.

Bitcoin sat idle. But historically, metals lead the way and risk follows. That rotation may arrive early in 2026.

What Does This Mean for 2026?

There is no hiding from the fact that Bitcoin has underperformed in 2025. But it was a year of progress, development and structural change.

We saw:

Multiple all time highs
The creation of the Strategic Bitcoin Reserve
Pro crypto legislation signed into law
A crypto friendly SEC and White House
Expanded access to Bitcoin through retirement plans
The end of tightening and early stages of monetary easing

All of this came alongside a red year for Bitcoin and currently 30% down from its all time high. Expectations are more grounded going into 2026. No calls for blow off tops or vertical rallies. But given the policy backdrop and recent correction, Bitcoin looks far closer to a bottom than a top. The groundwork has been laid throughout the year, and whilst not reflected in the price performance of Bitcoin, it has been invaluable for the long term health and performance for Bitcoin…

At current levels, it is fair to say Bitcoin is undervalued.

Stormrake 2026 Bitcoin Thesis:

Stormrake expects Bitcoin to trade materially higher in 2026, with a base case range of $180,000 to $250,000. The drivers are not speculative narratives, but balance sheet stress, sovereign refinancing pressure, and structurally limited supply.

Roughly $7 trillion in US debt matures in Q1 (and over a third of all US debt to mature in 2026). It must be refinanced at meaningfully higher yields, pushing interest expense near defence-level spending. Policy is no longer about inflation or employment. It is about fiscal survival. Bitcoin benefits not from collapse, but from visible refinancing stress and the constraints it places on monetary tools.

Liquidity is returning, not through headline QE, but quietly via repo facilities, yield curve interventions, and regulatory nudges. The Fed is already injecting billions through overnight repo. That liquidity is flowing into scarce assets. Bitcoin absorbs it faster each cycle.

Post-halving supply is negligible. ETF flows are steady. Institutions are allocating gradually.

Corporate treasuries and long-term holders are reducing float. 2026 is not about euphoria. It is about absorption.

Risks remain. A failed Treasury auction, prolonged high rates, or renewed regulation can delay upside. But in every stress case, the long-term thesis holds. Bitcoin is not pricing perfection. It is pricing policy distortion and fiscal constraint.

Bitcoin in 2026 is not competing with tech stocks or altcoins. It is competing with sovereign credibility. Volatility is the cost. Scarcity is the payoff.

Video of the month:

Michael Saylor Keynote | Bitcoin MENA 2025

Education: Beyond Price: On-Chain Metrics That Matter

Most Bitcoin investors only look at price as a way to measure value and decide whether to enter or exit a position. But there is much more to Bitcoin than just price, especially when it comes to evaluating where we are in the cycle. This is where on-chain data comes in, helping to assess Bitcoin’s true value based on investor behaviour, holding patterns and capital flow.

Here are three of the key on-chain metrics we use to better understand Bitcoin's value. Each provides a different lens on sentiment, valuation, and cycle timing.

MVRV Z-Score: Market Value to Realized Value

MVRV Z-Score is a chart that uses blockchain data to highlight when Bitcoin is significantly over or undervalued compared to its historical fair value.

It’s based on three components:

Market Cap (black line)
Realised Value (blue line), not the current Bitcoin price. This is calculated by taking the price at which each Bitcoin last moved (wallet to wallet), then averaging those prices and multiplying by the total circulating supply
Z-Score (orange line), a standard deviation measure that identifies extreme differences between Market Cap and Realised Value

Source: https://www.bitcoinmagazinepro.com/charts/mvrv-zscore/

On the chart, the green band near ~0.10 represents undervaluation and typically aligns with cycle bottoms. The red band around ~7 indicates overvaluation and has historically marked cycle tops. When Bitcoin enters either band, a top or bottom has usually followed within two weeks.

Right now, the Z-Score sits below 1, signalling that Bitcoin is undervalued and still trending lower. If the price continues to drop, the Z-Score will likely follow. Should it enter the green band, this would suggest a bottom is near and historically has offered generational accumulation opportunities.

Short Term Holder Realised Price:

Understanding Sentiment Through Recent Buyers

This metric reflects the average price that Bitcoin has been moved on-chain within the past 155 days. Anyone holding Bitcoin for less than 155 days is considered a short term holder.

Short term holders are more reactive to market volatility. They are more likely to sell during corrections and are typically driven by short term sentiment. This metric gives us a clear picture of whether recent buyers are in profit or in drawdown.

Source: https://charts.bitbo.io/sth-realized-price/

The chart shows Bitcoin price (yellow line) against the short term holder realised price (green line). When price is above the STH realised price, it indicates a bullish market as these holders are in profit. When price is below, it signals bearish sentiment as they are in loss.

Currently, the STH realised price sits around $99.7K, while Bitcoin is trading at $87K. That gap highlights a clear sentiment shift. Short term holders are under pressure, which explains the weak price action and overall bearish tone.

This metric is not only useful for sentiment. It also often acts as a dynamic support or resistance level during different phases of the cycle.

Long Term Holder Supply:

Tracking Smart Money Accumulation and Distribution

Long term holder supply refers to the total Bitcoin supply held by wallets that have not moved their coins for at least 155 days.

Source: https://charts.bitbo.io/long-term-holder-supply/

In the chart, Bitcoin price is shown by the orange line, and long term holder supply is represented by the green area. This metric helps us see when long term holders are accumulating or distributing their coins, and it usually leads price action.

Long term holder supply tends to peak just before Bitcoin price tops. This is when early investors begin distributing. It also tends to bottom around Bitcoin’s price peak, as new long term holders accumulate during bear markets. An increase in long term holder supply after a correction typically signals the early stages of a new cycle.

Currently, LTH supply sits around 14.1 million, the lowest since 2021, after peaking in June. That peak occurred just months before Bitcoin’s current all time high at $126K. If this supply begins to increase again, it would confirm that the cycle top is in, and accumulation is once again underway.

These are just three of many useful metrics that go beyond simple price analysis. Together, they help identify whether Bitcoin is undervalued, measure market sentiment, and give clues as to where we are in the cycle.

As it stands:

MVRV Z-Score suggests Bitcoin is undervalued
STH Realised Price shows short term sentiment is bearish
LTH Supply points to a potential cycle top already in

All three tell a story that Bitcoin may be in a bottoming phase. These metrics should be tracked regularly as they are often early signals of where Bitcoin could go next.

Written by Alexandar Artis

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

Disclaimer

All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.

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The Rake Review: October 2025

Mon, 03 Nov 2025 12:16:11 +1100

October Brought Lessons and November Brings Opportunity

As has been the case throughout this bull market, October delivered both highs and lows in rapid succession, each one offering its own lesson. A new all-time high was quickly followed by some hard truths for those chasing quick gains.

From All-Time Highs to Hard Lessons

October has built such a strong reputation for Bitcoin performance that it earned the nickname ‘Uptober’ from the crypto community. This year started just as expected. Within the first few days, Bitcoin printed a new all-time high and optimism returned across the board. But instead of pushing higher, the market was met with a brutal reversal that flipped sentiment overnight. What followed was not just a dip, but a historic liquidation event that shook the market and reminded everyone of one core truth in crypto.

Once again, the market served a painful reminder of why leverage should be approached with extreme caution. We have said it countless times and will keep saying it. Most people are better off buying spot, being patient, and letting the market do the work. But still, time after time, traders try to over-optimise, copy trade, or take on leverage thinking they can outperform. Unless you are part of the 0.01% of elite traders who can consistently beat the market, which is unlikely, the smarter move is to focus on accumulation and long-term positioning.

Large liquidation events are not rare. They are part of the game, especially in high volatility markets like crypto. Institutions and market makers know this better than anyone. They use size and timing to push price into high-leverage zones, triggering stop losses and liquidation cascades. Once the books are cleared, price often reverts back to its previous range. These are not fundamental moves. They are mechanical, structured plays designed to exploit retail positioning.

The professional manipulators playbook is simple. Dump the price, trigger liquidations, buy at a discount, then create momentum and exit at the highs. For leveraged investors, it usually ends in a wipeout. For professional manipulators, it is just another opportunity to accumulate or rent seek.

Yes, this wiped out a lot of traders and left a sour taste, particularly for more traditional investors who already view Bitcoin with scepticism. But for those who understand how the market functions, this was just another shakeout. Bitcoin has been through worse. It has survived 85% drawdowns, major exchange hacks, insolvencies, and regulatory crackdowns. Each time, it recovers and continues to grow.

Unlike July, when a Satoshi-era whale dumped nearly $3 billion in Bitcoin and triggered widespread panic, this month’s price action has been far more stable and mature. Sentiment, while cautious, remains constructive. That alone says a lot about how far the market has come.

Despite the severity of the liquidation, we now enter a much healthier backdrop. We have seen rate cuts, progress on the geopolitical front, and continued institutional adoption. Smart money continues to accumulate, not panic.

Bitcoin enters November with strong on-chain fundamentals, a cooling macro backdrop, and one of the most reliable seasonal trends in its favour. Historically, November has delivered an average return of 40.5%, and nine of the last fourteen Novembers have closed green.

October brought records, both good and bad. But now the dust has settled, the opportunity is clear. The conditions are aligning for what could be a very bullish end to the year.

The Shift from Shelter to Opportunity

When it comes to asset allocation, investors have no shortage of options. Most fall into the risk-on category and tend to perform well when macro conditions are supportive. But when sentiment turns, there is often a clear shift into risk-off assets that are perceived as safer havens.

Gold is traditionally seen as the go-to risk-off asset, while the S&P 500 represents a typical risk-on index, made up of equities that benefit from bullish conditions. Bitcoin, however, sits somewhere in between. While it is increasingly being pitched as a hedge, it still behaves like a high-beta risk-on asset, sitting much further down the risk curve.

In last month’s Rake Review, we examined Bitcoin’s correlation with both ends of the market. The conclusion was clear. Bitcoin has little to no correlation with gold and moves more closely in line with the S&P 500.

This year has been unusual in that both risk-on and risk-off assets have performed well. Gold is up 53% year to date, the S&P 500 has gained 16%, and Bitcoin is up 17%. All three have posted new all-time highs, with gold emerging as the clear standout. Its outperformance has been driven by ongoing macro uncertainty, from tariffs and interest rates to conflict in the Middle East. While gold has led the way, risk-on investors have been watching and waiting for capital to rotate back out of gold and into equities, and eventually into Bitcoin.

October showed early signs of that shift. As macro concerns began to ease, including progress on US-China trade tensions, signs of de-escalation in the Middle East, and clearer communication from the Federal Reserve, gold entered a correction. It retraced more than 10% from its all-time high in just over a week. At the same time, equity markets rallied to new highs, suggesting that capital is beginning to move back into risk-on territory.

But Bitcoin remained stagnant. Despite improving conditions, it spent most of the month trying to stay green. This is not unusual. Historically, the rotation begins with flows moving from gold into equities. Only once risk appetite fully returns do funds begin rotating into Bitcoin and the broader crypto space.

For most of the year, the macro environment has been mixed. Sentiment has been fragile and policy uncertainty has kept many sidelined. Yet despite all of this, Bitcoin remains up on the year and has posted several new highs, all without a major rotation into the asset.

Now, with geopolitical risks cooling, macro clarity improving, and Bitcoin entering its historically strongest month, the setup is there. November could be the point where the larger rotation finally moves into crypto.

From Setback to Setup

October got off to a strong start. Bitcoin hit a new all-time high and was up 10% within the first five days, living up to the hype of ‘Uptober’. Momentum was building, and expectations were high. However, things quickly turned. After a brief period of consolidation, Trump announced new tariffs on China, and within minutes, $20 billion in open interest was liquidated. Bitcoin dropped from $117,000 to $102,000 in under 20 minutes.

The event shattered any bullish momentum. The rest of the month became a grind. Retail and institutional players largely stayed on the sidelines, while those caught in the liquidation cascade tried to leverage their way back in – and were wiped out again. Volatility remained high, but most daily moves reversed by the end of each session, creating choppy, directionless price action.

By 31 October, Bitcoin had failed to deliver on ‘Uptober’s’ promise. Despite setting a new all-time high early on, the month closed down 3.79%. There were multiple bullish attempts as sentiment began to turn – fuelled by the anticipation of an interest rate cut, optimism around a resolution in the US-China tariff standoff, and capital beginning to flow back in as gold corrected. But every rally attempt was knocked back by fresh headlines, the most damaging being Jerome Powell’s hawkish tone following the 25 basis point cut.

Still, throughout the month, we highlighted the broader opportunity. Weakness and underperformance created space to accumulate before what is historically Bitcoin’s strongest month – November. Over the past 14 years, nine Novembers have closed green, with an average monthly return of 40.5%.

Source: https://www.tradingview.com/x/NRlZdWa2/

While October ended in the bears’ favour, the bulls have built a foundation for a potential November breakout. The bullish fair value gap, which acted as deeper support, has now been filled and offered the relief needed to stabilise price action heading into the new month.

Looking forward, if we take the historical November average and apply a 40.5% increase from current levels, Bitcoin could rally towards $150,000. While that scenario remains statistically unlikely – with Kalshi giving it just a 6% probability – it aligns with the 2025 projections many had been making for months. If it were to happen, November would be the month to watch.

The macro backdrop is shifting. A resolution between the US and China now looks to be in place following a key meeting between Trump and Xi, which resulted in a trade deal. Interest rate uncertainty remains the main concern. With the US government still shut down, key data releases remain paused unless further exceptions are granted. However, there is growing expectation that the shutdown will end in November, potentially unlocking the economic data needed to guide the Fed's final rate decision in December.

In the News:

Morgan Stanley Recommends Crypto Allocations:

On 5 October, Morgan Stanley's Global Investment Committee advised clients to allocate up to 4% of "opportunistic growth" portfolios and 2% of "balanced growth" portfolios to digital assets. This guidance, which impacts over 16,000 advisors managing $2 trillion in assets, marks a significant moment for institutional adoption. It reflects growing confidence from TradFi, especially on the back of Q3’s $3.9 billion in unrealised Bitcoin gains for firms like MicroStrategy. The move signals continued diversification into crypto as a potential hedge against inflation.

Interest Rate Cut and the Road Ahead:

We saw the second interest rate cut of the year take place, this time by 25 basis points, bringing the current target range to 4.00%–4.25%. The timing of the decision was complex. With the US government shut down throughout October and likely to remain so, key data the FOMC typically relies on was unavailable. An exception was made for CPI inflation data, but broader economic inputs were missing. Jerome Powell acknowledged that this made the policy decision more difficult, though the committee ultimately moved ahead with the 25 bps cut.

Markets had been split on whether we’d see 50 or even 75 bps of total easing between now and December. However, Powell’s hawkish tone during the press conference shifted expectations. His comment that “a further reduction in the policy rate at the December meeting is not a foregone conclusion” spooked investors. As it stands, markets are pricing in a 68% chance of a 25 bps cut in December, with a 32% chance of no change.

October’s Cryptocurrency ETF Momentum:

October was a breakout month for crypto ETFs. Bitwise launched its Solana Staking ETF, while Canary Capital listed both a spot Litecoin ETF and a spot Hedera ETF. Meanwhile, 21Shares filed for a spot Hyperliquid ETF. The uptick in both filings and listings, particularly across altcoins, continues to legitimise the sector and signals increased institutional interest beyond just Bitcoin and Ethereum. As the ETF landscape broadens, so does crypto’s foothold in traditional finance.

Market Update:

Here is the fast five of what you need to know about the market in October 2025:

Bitcoin fell by 3.79% in October
Ethereum fell by 7.64% in October
The top 10 remained unchanged from last month
Bittensor (TAO) was a standout performer of the month, up 38% for the month
The total crypto market fell by 5.50%

Video of the month:

Charles Hoskinson Keynote at TOKEN2049 Singapore 2025

Education: The Painful Truth About Leverage

Now this may seem like a familiar topic, and it is, but it remains one of the most important lessons in this market. Unfortunately, it is also the one most traders seem determined to ignore until it is too late. The consequences are rarely small. Portfolios get wiped, capital evaporates, and lessons are learned in the most unforgiving way possible.

This month was a sharp reminder of that reality. Over $20 billion in open interest was flushed out of the market in a single day. That figure is not a typo. It was one of the largest liquidation events we have seen in recent memory, and it unfolded fast. Overleveraged long positions were caught completely offside, with cascading liquidations driving prices down across the board and wiping out billions in unrealised gains.

Events like this show exactly why we continue to push the message of buying spot and keeping leverage to a minimum. It is not about being risk-averse. It is about understanding that leverage adds a layer of complexity that most are not equipped to manage. It amplifies your exposure, but also your risk, your margin for error, and your emotional response. In markets as volatile and fast-moving as crypto, that is a dangerous cocktail.

Using leverage means you are not just predicting direction. You are predicting the timing, the size of the move, and the reaction of other participants. You are betting against time, liquidity, volatility, and even platform stability. All of those variables can turn against you in a flash. And when they do, they do not just dent your PnL. They close your positions and leave you sidelined.

A sharp wick down can liquidate a well-placed long before the market even bounces. A funding rate spike can skew your entry. A flush in open interest can trigger a domino effect that wipes out hundreds of millions in positions. These are not rare events. They are baked into how the market functions.

The hard truth is that most traders simply do not need leverage. If you are bullish, buy spot. If you believe in an asset, hold it. Building wealth in this space does not require 10x or 50x leverage. It requires patience, capital preservation, and a clear head. The obsession with maxing out position size is what gets people rekt. You only have to get it wrong once.

We broke all of this down in our Thunder Trading article earlier this month. If you missed it, we are including it again here. It walks through the mechanics of what happened, why it happened, and how you can avoid becoming part of the next liquidation wave. We do not rehash content unless it matters. And this one matters.

Too many people lose too much money learning this lesson after the fact. Do not be one of them.

Stormrake returns to the Australian Crypto Convention

We’re thrilled to be sponsoring the Australian Crypto Convention in Sydney on 22 and 23 November. As a sponsor, we’ll have a dedicated booth at the event and invite you to come by, meet the team.

Our Director and COO Bisher Khudeira will be there alongside members of our senior team including our Senior Brokers, Senior Trader, and Senior Analyst, ready to connect and talk all things crypto.

The Stormrake booth will feature a popcorn machine for a quick snack and a live DJ booth to keep the energy high. Contact your Stormrake Broker for details and to secure your ticket.

We look forward to seeing you there.

Written by Alexandar Artis

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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When Leverage Fails Spot Prevails

Fri, 17 Oct 2025 09:29:57 +1100

Time and time again, investors attempt to beat the classic buy and hold strategy by either overtrading or, even more risky, incorporating leverage into their trading approach. Leverage can come in a number of forms, whether it’s options contracts, derivatives, copy trading, or algorithmic trading bots. But all carry significant risk when things don’t go to plan, and often, all it takes is one event to reset everything to zero.

One wrong trade, poor risk management, or even events completely out of your control can determine whether you succeed or get wiped out.

Most investors will experiment with leverage at some point in their journey. And for many, these moments become turning points. Even experienced investors aren’t immune to losses with leverage. The old adage still rings true:

90% of investors lose 90% of their capital within 90 days when trading with leverage. That statistic alone shows where the majority stand.

Yes, spot holders are also exposed to volatility, but without the looming threat of a margin call or total liquidation. They may experience drawdowns, but the position remains. It’s not lost, it’s simply fluctuating.

This Weekend: A Lesson in Real Time

Over the weekend, we saw a textbook example of how spot prevailed once again.

A record-breaking $20 billion in leveraged positions was liquidated as Bitcoin dropped over 15% within 30 minutes. Most altcoins dropped further, with some down more than 80%. Anyone with leveraged exposure, including via bots or derivatives, faced margin calls and forced liquidation.

Meanwhile, spot holders experienced the same drawdowns, but crucially, they’re still holding their assets. A Bitcoin holder still holds their Bitcoin. An altcoin holder still owns their tokens. That’s the difference.

Let’s explore three simplified scenarios: Where three investors make allocations on Friday (October 10), their portfolio valuations at the time of the liquidation event at 8:30am (October 11) and then their portfolio value on the following Tuesday (October 13).

Scenario A: $100K Spot Allocation into Bitcoin

Investor A allocates $100K into Bitcoin on Friday, purchasing approx. 0.45 BTC
Saturday 8:30am: Portfolio is worth ~$85K
Today (Tuesday): Portfolio has recovered to ~$95K

Investor still holds 0.45 BTC

Scenario B: $100K Spot Allocation into an Altcoin (SUI)

Investor B allocates $100K into SUI at $3.40 (approx. 30,000 tokens)
Saturday 8:30am: Portfolio worth ~$15K (SUI drops ~85%)
Today: Portfolio has recovered to ~$80K

Investor still holds 30,000 SUI

Scenario C: $100K into a Leverage Strategy or Bot

Investor C allocates $100K into a leveraged strategy or bot on Friday
Saturday 8:30am: Liquidated, portfolio value = $0
Today: Despite recovery in BTC and altcoins, portfolio still = $0

Assets are gone, position cannot recover

There’s a clear outcome here. Investor C was completely wiped out. Investors A and B, while facing drawdowns, are still in the game and positioned to benefit from any further market recovery.

The Stormrake Difference

Stormrake offers spot-only access to digital assets. We do not promote or facilitate margin trading, leveraged instruments, or derivative strategies. As a result, our clients were not impacted by this weekend’s record-setting liquidations.

Those holding spots through Stormrake remain in control of their portfolios and their assets.

If You’ve Been a Victim of Liquidations:

First of all, it’s not the end. Many have experienced the same. You’re not the first, and certainly won’t be the last.

But it’s what happens next that matters.

There are two types of responses to a liquidation:

1. "I’ll act differently next time."

A natural reaction. You may tell yourself you’ll manage risk better, exit positions faster, or tweak your strategy. But fundamentally, the risk remains the same. No one predicted this liquidation event, and there’s no reason to believe something similar or worse won’t happen again. In the current macro environment, where a single headline or tweet can move markets dramatically, risk management becomes even harder to execute reliably. The definition of insanity is doing the same thing and expecting a different result.

2. Learn and adapt.

The better path. Learn from the liquidation and reassess your strategy. Consider switching to spot positions, remove leverage from your portfolio, and take a long-term view. Avoid chasing short-term, promised returns and give your assets the time and space to grow sustainably.

Final Thoughts

The market delivered a clear message this weekend. Leverage can be lucrative, but it's also ruthless. And when volatility strikes, survival is the priority.

Spot holders ride through the storm. Leveraged traders often don’t.

Make sure you’re still in the game when the next wave comes.

Written by Alexandar Artis

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No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.