ETH Below $2K: Record Futures OI May Supercharge Volatility
Liquidations, Options, and the Volatility Loop The weeks selloff coincided with heavy liquidations across crypto and a sizable options expiry window — two ingredients that can reinforce each other. Over a 24-hour span into May 28, roughly $958.8 million in crypto positions were liquidated, with about $897 million being longs, according to CoinDesk. In that same window, CoinDesk reported ETH open interest still rose about 0.61% to 16.39 million ETH. Simultaneously, approximately $8 billion of options notional were set to expire on Deribit around May 29, including roughly $1.4 billion tied to ETH — a near-term gamma event that can amplify realized swings, as noted by CoinDesk. How a selloff becomes a cascadePrice breaks a round number (e.g., $2,000), tripping stops and prompting hedges.Perp funding turns, and levered longs face margin calls; forced sells hit thin liquidity.Options dealers adjust delta and gamma hedges into a falling market, selling spot or futures.Downside liquidity gaps widen; more stops and liquidations fire as mark prices slide.Volatility spikes; some shorts cover, others press. The move overshoots until hedging flows subside. That loop can run in reverse on sharp squeezes if shorts are crowded. The key is not direction but asymmetry: when leverage is high, small triggers can create