Rising open interest with a massive skew toward buys is not the strength of a trend, but the volume of leverage accumulated on one side. The higher it is, the more positions sit next to each other at stop-loss and forced-liquidation levels.
Santiment recorded exactly this picture: talk of getting rich quick on social media and a growing number of longs. Historically, such sentiment readings work as an overheating indicator, not as confirmation of a move.
Overnight Moscow time, the scenario played out. When price moves against the overloaded side, a liquidation cascade triggers (forced closing of leveraged positions when the margin is insufficient): closed longs themselves push the price down and knock out the next ones.
What this means in practice: with high open interest and one-sided sentiment, moves become sharper and slippage on stops is larger. The low liquidity of overnight hours amplifies the effect.
Woke up and saw the wrong candle?
An overnight leverage flush is familiar to almost everyone who trades crypto. And the issue here isn't just the stop: on a deposit of a couple thousand, even a successfully traded cascade yields an amount you don't notice. In prop trading, the trading notional is provided by the company: you pay for a test account, pass it according to the rules, and trade its volume for a share of the profit. Overheatings in crypto happen once every couple of weeks - it makes more sense to understand the mechanics before the next one.