FameEX Hot Topics | Expert Says $19B Crypto Market Crash Was Caused by Organic Deleveraging

The $19 billion liquidation event in the crypto market on Friday left analysts and traders split on its origins. While some see it as a natural part of the market cycle, with organic deleveraging playing a key role, others have pointed to coordinated actions by market makers as a contributing factor. The massive liquidation, which significantly impacted the market, sparked debate over the true cause behind the crash and whether certain players deliberately intensified the decline.

According to data from DefiLlama, the flash crash caused a dramatic drop in open interest for perpetual futures on decentralized exchanges (DEXs), which fell from $26 billion to just below $14 billion. In addition to this, crypto lending protocol fees surged beyond $20 million, setting a new record for daily totals. Weekly trading volumes on DEXs also spiked, surpassing $177 billion, while borrowing across lending platforms decreased to under $60 billion for the first time since August, highlighting the market's vulnerability during the event.

Despite claims from some traders that the crash was driven by a coordinated effort involving platform glitches and large market players, blockchain data suggests that much of the liquidation was a natural, organic process. Axel Adler Jr., an analyst at CryptoQuant, examined the situation and found that a significant portion of the $14 billion decline in open interest was attributed to controlled deleveraging, rather than a cascading liquidation event. Adler emphasized that only $1 billion worth of Bitcoin long positions were liquidated, which he described as a “mature moment for Bitcoin.”

Nevertheless, not all market participants agree with this analysis. Some traders continue to accuse major market makers of playing a role in deepening the crash by pulling liquidity from exchanges at critical points during the sell-off. This further fueled speculation that the market makers contributed to the sharp downturn, suggesting that the crash might have been more orchestrated than initially believed.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.