How crypto-native leverage drove Bitcoin sell-off while ETFs barely flinched
John: Hey everyone, I’m John, a veteran writer for Blockchain Bulletin, where we break down the wild world of Web3, crypto, and blockchain in simple terms. Today, we’re diving into the recent Bitcoin sell-off in October 2025, driven by something called crypto-native leverage, and why ETFs stayed surprisingly steady. For readers who want a full step-by-step guide, you can also check this exchange guide.
Lila: Hi, I’m Lila, John’s curious assistant who’s always learning about crypto. John, what’s this “crypto-native leverage” all about, and why did it cause a Bitcoin dip while ETFs just shrugged it off?
Basics of Crypto-Native Leverage
John: Great question, Lila. Crypto-native leverage refers to borrowing money within the crypto ecosystem to amplify your trades, often through tools like perpetual futures on platforms like Binance or Bybit. It’s like using a magnifying glass to make your bets bigger—if things go well, you win more, but if they don’t, losses hit harder.
Lila: Perpetual futures? That sounds fancy. Can you explain it like I’m five?
John: Sure! Imagine perpetual futures as ongoing bets on Bitcoin’s price without an expiration date, unlike traditional futures that end on a set day. In the crypto world, these are popular because they let traders use high leverage, say 10x or more, meaning you control $10,000 worth of Bitcoin with just $1,000 of your own money. But if the price moves against you, exchanges force-sell your position to cover losses, which is called liquidation.
Background on the Recent Sell-Off
John: Let’s look back at what happened. As of 2025-10-17, Bitcoin dropped 13.1% from a high of $122,316 on 2025-10-03 to $106,329. This sell-off wasn’t just random; JPMorgan analysts pointed out it was fueled by deleveraging in crypto-native markets, where over $19 billion in leverage got wiped out through liquidations.
Lila: Deleveraging? Is that like cleaning out your closet after buying too many shoes?
John: Haha, close enough—it’s like the market forcibly selling off overborrowed positions to reset the balance. In the past, similar events happened during the 2022 crypto winter, but this October 2025 episode was tied to perpetual futures seeing sharp open interest drops, meaning fewer leveraged bets were active after the dust settled.
Impact on ETFs
John: Now, here’s the interesting part: while crypto-native traders felt the pain, Bitcoin spot ETFs barely flinched. According to recent data from Cointelegraph on 2025-10-04, these ETFs logged $3.2 billion in inflows during the second-best week for “Uptober,” showing institutional investors weren’t rushing to sell.
Lila: ETFs? Like those exchange-traded funds that track Bitcoin’s price without you having to hold the actual coins?
John: Exactly! Spot Bitcoin ETFs, approved by the SEC back on 2024-01-10, let everyday investors buy into Bitcoin through traditional stock markets. In this sell-off, ETF outflows were minimal compared to the deleveraging chaos—JPMorgan noted that CME futures and ETFs absorbed little forced selling, keeping things stable for big players.
Why ETFs Barely Flinched
John: ETFs stayed calm because they’re less about high-risk leverage and more about long-term holding. Recent news from CryptoSlate on 2025-10-18 highlights that while perpetual futures markets deleveraged sharply for both Bitcoin and Ethereum, ETFs saw inflows pushing 2025’s total to a record $48.7 billion as of mid-October.
Lila: So, it’s like the difference between a rollercoaster ride and a steady train journey?
John: Spot on! Crypto-native leverage is the rollercoaster—thrilling but volatile—while ETFs are the train, backed by institutions that don’t panic-sell. For Ethereum, similar patterns emerged, with ETH dropping amid sell-offs, but its spot ETFs attracted $170 million in inflows during the turmoil, per Bitget News on 2025-10-16.
Risks and Safeguards
John: Of course, leverage isn’t all fun and games. The main risk is liquidation, where your position gets closed automatically if prices swing too far, leading to big losses. In this October 2025 event, it caused a market reset, washing out speculative bets.
Lila: Yikes, that sounds scary. What can beginners do to stay safe?
John: Good safeguards include starting small and using stop-loss orders. Here’s a quick list of tips:
- Only use leverage if you understand the risks—stick to 2x or less as a newbie.
- Monitor your positions closely, especially during volatile periods like this month’s sell-off.
- Diversify into ETFs for stability, as they weathered the storm with minimal outflows.
- Read up on trusted sources like CoinDesk for real-time updates to avoid FOMO-driven decisions.
John: (And hey, if leverage feels like juggling chainsaws, maybe stick to spot trading—it’s less likely to bite back!)
Looking Ahead
John: Moving forward, October 2025 is shaping up as “ETF month,” with the SEC set to decide on 16 more crypto ETFs by month’s end, including ones for Solana and XRP, as per Cointelegraph on 2025-09-29. This could spark altcoin rallies and bring more stability to the market.
Lila: Will this make crypto less volatile in the future?
John: It’s possible—more institutional involvement via ETFs might dampen extreme swings from crypto-native leverage. Looking ahead to 2026, analysts from MEXC predict a market reset could lead to healthier growth, with Bitcoin potentially stabilizing above $100,000 if ETF inflows continue at this pace.
John: Wrapping this up, it’s fascinating how the crypto world is evolving, with leverage-driven drama on one side and steady ETFs on the other—proving that not all parts of the market move in sync. Remember, knowledge is your best tool in this space. And if you’d like even more exchange tips, have a look at this global guide.
Lila: Thanks, John—that makes sense of the chaos! Key takeaway: Leverage can amplify ups and downs, but ETFs offer a smoother ride for the long haul.
This article was created using the original article below and verified real-time sources:
- How crypto-native leverage drove Bitcoin sell-off while ETFs barely flinched
- Bitcoin ETFs Log $3.2B In Second-Best Week For Uptober
- October is ‘ETF month’ as 16 crypto funds await final decision
- crypto-native leverage drove sell-off; ETFs barely flinched