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Crypto traders rush to hedge after record $19 billion market wipeout

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After the largest crypto liquidation in history, investors in the options market are scrambling to protect themselves from another potential collapse in bitcoin and ether, bracing for heightened volatility following last week’s dramatic sell-off.

More than $19 billion in leveraged crypto positions were liquidated last Friday as panic selling and thin liquidity triggered violent swings. Analysts said the 24-hour liquidation was nine times larger than the February 2025 crash and 19 times greater than the 2020 and FTX meltdowns combined. The sell-off was sparked by U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports and threats of export controls on critical software.

Bitcoin plunged as low as $104,782, down over 14% from its recent record high of $126,000. It has since recovered to around $115,700. Ether also dropped more than 12%, while altcoins such as DOGE, HYPE, and AVAX saw losses exceeding 50% before partially rebounding.

Options traders have since piled into put contracts — which grant the right to sell — at strike prices of $115,000 and $95,000 for bitcoin and $4,000 and $3,600 for ether, signaling rising bearish sentiment through year-end, according to data from Derive.xyz.

Despite the turmoil, on-chain analyst Willy Woo said bitcoin’s investor flows have remained relatively stable compared to other assets, suggesting capital may be rotating from altcoins into bitcoin rather than exiting crypto altogether. Still, analysts caution that bitcoin must overcome key resistance levels before regaining upward momentum.

Coinbase Acquires Deribit for $2.9 Billion to Expand Crypto Options Reach

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Coinbase, the largest publicly traded cryptocurrency exchange, announced a $2.9 billion acquisition of Deribit, a leading crypto derivatives platform, as it looks to strengthen its position in global crypto options trading and cater to a growing base of institutional and advanced retail investors.

The deal, comprising $700 million in cash and 11 million shares of Coinbase’s Class A stock, marks a strategic expansion beyond the U.S. and into derivatives-heavy markets such as Asia and Europe, where leveraged trading is more common. Deribit, known for its dominant role in crypto options, will provide Coinbase with a significant foothold in these international markets.

According to analysts, the acquisition positions Coinbase to benefit from the increasing demand for options as a hedging tool—especially during market volatility—while also opening doors for regulatory-compliant expansion should the U.S. legalize crypto options and perpetuals trading domestically.

“This acquisition gives Coinbase a real chance to become the go-to platform for derivatives trading in crypto globally,” said Bo Pei of US Tiger Securities. He added that the move reflects a broader trend of U.S.-based firms consolidating market share and scaling into more sophisticated financial products.

Coinbase has already seen record growth in both consumer and institutional derivatives volumes in the last quarter, even though it’s still in the early stages of the derivatives business. Its stock rose 5.7% on the announcement, partially recovering from a 21% decline earlier in 2025. The company is scheduled to report its Q1 earnings after Thursday’s market close.

The move also comes amid renewed political and regulatory interest in crypto. Former President Donald Trump has recently pledged to make the U.S. a global leader in digital assets, a stance that has encouraged optimism among crypto companies and investors alike.

Other firms are also making bold plays: Ripple recently acquired Hidden Road for $1.25 billion, and Kraken bought NinjaTrader for $1.5 billion to expand into retail futures. Analysts expect more consolidation ahead, with U.S. firms likely leading the wave.

Coinbase’s acquisition of Deribit may serve as a milestone in reshaping the competitive landscape of the crypto derivatives market — potentially giving it a long-term edge as global regulations evolve.