How crypto traders are positioning themselves after the ‘Black Friday’ crash

The crypto market is in the wake of a historic liquidation event, with one options expert noticing a dramatic shift in traders’ sentiment and strategy.

Last Friday, approximately $20 billion in positions were wiped out as Bitcoin plunged 17% within hours. The sale, now called “Black Friday,” took place after President Trump announced a 100% tariff on all Chinese products in response to Beijing’s restriction on exports of rare minerals, Declutter earlier 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 on the market,” said Sean Dawson, head of research at on-chain options platform Derive. Declutter.

“What we saw was a classic cascade effect: panic selling in tight markets, exacerbated by the sudden evaporation of liquidity as market makers pulled prices to manage risks,” he added.

He explained that once that liquidity disappeared, any forced sales had an outsized impact, triggering further liquidations and accelerating the crash, Dawson explained.

“Volatility has skyrocketed across all maturities, not just short-term options,” Dawson explains. It signals that the market is bracing for a prolonged period of instability, not just a short-term shock.

He noted that traders are moving away from upside exposure and focusing on downside protection, a shift reflected in a decreasing skew that shows investors strongly favor puts – with notable interest in downside strikes of $115,000 and $95,000 for Bitcoin and $4,000 and $3,600 for Ethereum.

What’s next?

Bitcoin is up 4.4% in the past 24 hours, with Bittensor’s 42% gain leading the recovery among the top 50 altcoins, per Coin gecko facts.

While the crypto rebound this weekend is encouraging, it “masks deeper structural risks,” Marco Lim, managing director at Solowin Holdings and founder of MaiCapital, told me. Declutter.

“My concern is not about fees – it is the systemic vulnerability around WBETH and Binance’s liquidity dominance,” Lim said.

He pointed out that “a 10% move in Bitcoin has already put pressure on Ethereum’s liquidity,” suggesting that “if Binance remains the only point of failure for stablecoin flows, we are one sharp correction away from a cascading unwind.”

Declutter reached out to Binance for comment on WBETH’s liquidity issues but did not receive an immediate response.

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

While near-term demand remains bearish, data shows increased demand for calls over 30-day horizons, suggesting some traders are looking for an eventual recovery later in the quarter.

While volatility is likely to remain high, Dawson warned that as the market restores liquidity and confidence, traders will remain defensive, at least until macro risk subsides.