Crypto markets were initially defined by a high share of spot trading, setting them apart from traditional markets where derivatives dominated. However, by early 2026 the situation had flipped.
According to CryptoQuant analysts, derivatives now make up 75% to 80% of the entire crypto market volume, leaving spot trading a mere quarter of the turnover. The leverage inherent in futures famously contributed to the 2008 stock market crash, and the crypto sphere is now repeating that path, but with far greater risks.
The Domination of Perpetual Contracts
A particular problem emerged with the rise of perpetual swaps. Unlike traditional contracts, they have no expiry date. According to Cryptomus analysts, the structure of the derivatives market today looks severely skewed: Perpetual futures account for ~78% of total derivatives trading volume. Traditional (fixed-term) futures hold only the remaining share, mostly in the institutional sector (CME).
The perpetual model allows speculators to hold positions indefinitely, thanks to the funding rate mechanism. Perpetuals have become a tool even for former holders who abandoned spot for synthetic positions, creating an illusion of liquidity.
Deadly Grids and Liquidation Cascades
Holders are a vital element of the ecosystem. Previously, they used the DCA (dollar-cost averaging) strategy, but the shift to perpetuals turned this into dangerous Grid trading or even Martingale systems. Why are grids dangerous? They generate profit during flat periods or trends, but sharp corrections lead to accumulating positions against the market, resulting in margin calls.
The year 2025 clearly showed the scale of the disaster:
• October 2025 ("The 1011 Crash"): On October 10–11, geopolitical shocks triggered the largest cascade of liquidations in history. Approximately $19.89 billion worth of positions were forcibly closed over 48 hours. At the peak on October 10, $3.21 billion evaporated in a single minute.
• November 2025: The market hadn't recovered, and subsequent liquidation waves wiped out another roughly $5–7 billion in open interest.
The Current Situation: Early 2026
Bitcoin is currently falling for the 4th month in a row, threatening to surpass the negative records of 2018. January 2026 only confirmed the system's fragility:
• January 31, 2026: $2.56 billion in positions were liquidated in a single day, with over $2.4 billion of that being long positions.
• Early February 2026: The BTC price dropped to the $74,500 – $78,000 range, which is 40% below the October 2025 highs of $126,100.
The situation is worsened by the near-total disappearance of traditional futures. When the market is dominated by perpetuals with massive leverage, any 5% dip can turn into a multi-day 15% crash due to automatic liquidations that no one is there to buy, as there is less and less "real" spot capital in the system.
