Perpetual Swap Contracts Took a Huge Hit During Monday’s Crash: Here’s the Damage

The week started on a shaky note for United States financial markets, including the crypto space, after President Donald Trump imposed trade tariffs on imports from Canada, Mexico, and China. Cryptocurrencies bled billions of dollars across all markets, including spot and derivatives.

According to a weekly report by the leading crypto derivatives exchange Bybit and the institutional-grade analytics and research platform Block Scholes, the market bloodshed left an estimated $10 billion-sized hole in open interest for perpetual swap contracts. While some crypto assets maintained positive funding rates, others endured heightened turbulence.

Perpetual Swaps Lose Billions Amid Sell-off

The estimated $10 billion wipeout was revealed by Bybit CEO and co-founder Ben Zhou, citing the exchange’s options data. However, in the latest report, Bybit said Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Solana (SOL) saw more than $3.1 billion in open interest losses across their perpetual swap contracts.

Amid the market turmoil, trading volumes across perpetual swaps surged to a monthly high of $31 billion as traders scrambled to exit their positions. Despite the rush, there were a lot of liquidated leveraged positions as traders missed their margin calls during the sharp drop in spot prices of BTC, ETH, XRP, and SOL.

Monday was the second consecutive one with a morning sell-off – the market also bled on January 27 due to the emergence of DeepSeek, a much cheaper artificial intelligence model – and as a result, perpetual swap funding rates spiraled downwards. Only bitcoin funding rates remained afloat at a neutral level.

“BTC’s open interest didn’t fall in the same way that we observed in perpetual swap markets. This suggests that there was neither a significant notional value of options open interest liquidated in the spot sell-off, nor did the sell-off result in a significant spike in trade volumes at the beginning of the month,” the report said.

ETH Leads Altcoin Decline

Altcoins, on the other hand, showed a more persistent negative trend after the crash as bears dominated the market, with ETH leading the way. Realized volatility for the second-largest cryptocurrency rose above 140%, its highest level in more than three months. In addition, ether’s implied volatility term structure spiked and remained inverted for days after the sell-off.

Alongside ether’s negative funding rates, the cryptocurrency’s spot price saw a deeper correction than bitcoin’s, falling to $2,500. With ether’s implied volatility approximately 15 points higher than bitcoin’s at equivalent tenors, traders expect continued volatility as the asset’s downside has not been fully priced in.