Bitcoin prices slumped to a nine-week low just below $57,000 on May 1, shedding a further 4% on the day. The asset has now bled a whopping 11% since the same time last week.

Market dips and flush-outs are not uncommon for crypto assets, but Glassnode analyst James Check thinks this time is different.

Large derivatives-led deleveraging events were a big feature in the 2021 bull market and have been seen on several occasions this year, the last one in mid-April.

However, Check observed that they did not cause this week’s crypto crash in a post to X on May 2.

Derivatives Not The Cause

“Funding rates have cooled off gradually, not violently, which is very healthy to see,” he said before adding:

“It suggests we didnt see a massive futures margin call yesterday.”

Funding rates are fees set by derivatives exchanges to maintain the balance between the contract price and the underlying asset price.

For those of you around in the 2021 #Bitcoin bull market, you will remember the massive derivatives led deleveraging events which killed it.

Are we seeing a derivatives led flush out today?

I dont think so.

Funding rates have cooled off gradually, not violently, which is… pic.twitter.com/KSDoAMCVSF

The analyst produced another chart showing that Bitcoin futures Open Interest (OI) has declined over the last year in BTC terms.

“This compares OI to market size and shows a relative leverage reduction,” he added.

Open Interest is the number of outstanding crypto derivatives contracts that have yet to be settled.

Check acknowledged that futures markets also saw two significant deleveraging events prior to this sell-off but added, “Again, it doesnt feel like derivatives were the dominant factor in this Bitcoin sell-off.”

“Rather than a derivatives-led sell-off, I believe this is primarily spot-driven weakness, a result of both short-term sell-side and weaker demand.”

According to Deribit, there is around $1.3 billion in OI for Friday’s Bitcoin options expiry event showing that demand for derivatives remains healthy.

Crypto Markets Bleed

Total market capitalization has declined by over $240 billion over the past week, falling to $2.26 trillion during Thursday morning trading in Asia.

The wider market has shrunk by 22% since its 2024 peak level of around $2.9 trillion.

Technical analyst ‘Rekt Capital’ was unfazed, stating that markets have entered a historically recurring re-accumulation phase.

#BTC

The more Bitcoin consolidates anywhere between current price levels $70,000 after the Halving

The more this cycle will decelerate and resynchronise with its regular historically-recurring Halving Cycle with a Bull Market peak in mid-September/October 2025$BTC… pic.twitter.com/9WC97sXNbJ

BTC was trading at $57,469 at the time of writing, while ETH had slumped 2% to $2,920. The altcoins were a mixed bag today, but Binance Coin (BNB) and Toncoin (TON) were seeing larger losses.