The cryptocurrency market enters the third quarter of 2026 with a notable shift: thinner liquidity coupled with reduced leverage. According to institutional trading platform Talos, the Q2 turmoil resulted in $8.35 billion in long liquidations, which caused open interest for Bitcoin and Ether to drop sharply. This was compounded by persistent ETF outflows, weaker purchasing activity from Strategy (formerly MicroStrategy), and declining market depth.
Talos highlighted that the reduction in leverage signals a healthier risk profile entering Q3 after the aggressive deleveraging of the previous quarter. However, the accompanying liquidity contraction could lead to sharper price swings. The report suggests traders should brace for lower volume conditions but also fewer forced liquidations unless a major catalyst emerges.