How Crypto Traders Are Positioning Following 'Black-Friday's' Crash

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The crypto market is navigating the aftermath of a historic liquidation event, with an options expert noting a dramatic shift in trader sentiment and strategy. 

Roughly $20 billion in positions were wiped out last Friday as Bitcoin plummeted 17% in a matter of hours. The sell-off, now dubbed “Black Friday,” occurred after President Trump announced a 100% tariff on all Chinese products in response to Beijing’s restriction on rare mineral exports, Decrypt previously reported. 

The shockwave also hit traditional markets, sending the S&P 500 down 3.37% to a 29-day low.

“Friday’s meltdown was the most dramatic in crypto history, with nearly $19 billion in liquidations across the market,” Sean Dawson, head of research at on-chain options platform Derive, told Decrypt. 

“What we saw was a classic cascade effect, panic selling in thin markets compounded by the sudden evaporation of liquidity as market makers pulled quotes to manage risk,” he added.

He explained that once that liquidity vanished, every forced sell had an outsized impact, triggering further liquidations and accelerating the crash, Dawson explained. 

“Volatility has surged across all maturities, not just short-term options,” Dawson explained. It indicates the market is bracing for a prolonged period of instability, not just a short-lived shock.

He noted that traders are moving out of upside exposure and into downside protection, a shift reflected in a declining skew that shows investors are heavily favoring puts—with notable interest in downside strikes at $115,000 and $95,000 for Bitcoin and $4,000 and $3,600 for Ethereum.

What’s Next?

Bitcoin is up 4.4% over the past 24 hours, with Bittensor’s 42% gain leading the recovery among the top 50 altcoins, per CoinGecko data.

While the crypto rebound this weekend is encouraging, “it is masking deeper structural risks,” Marco Lim, managing director at Solowin Holdings and founding partner of MaiCapital, told Decrypt.

“My concern isn’t tariffs—it’s the systemic fragility around WBETH and Binance’s liquidity dominance,” Lim said. 

He pointed out that “a 10% move in Bitcoin already stressed wrapped Ethereum liquidity,” suggesting that “if Binance remains the single point of failure for stablecoin flows, we’re one sharp correction away from a cascading unwind.”

Decrypt reached out to Binance for a comment on WBETH’s liquidity concerns but did not receive an immediate response.

Dawson echoed, noting that the rebound “doesn’t mean the danger has passed. This feels more like a recalibration, a pause before the next move.”

While demand in the short term remains bearish, data showed an increased demand for calls on the 30+ day horizon, suggesting some traders are looking for an eventual recovery later in the quarter.

While volatility is likely to remain elevated, Dawson cautioned that as the market rebuilds liquidity and confidence, traders remain on the defensive, at least until the macro risk subsides.