FameEX Hot Topics | Analyst Claims $19B Crypto Market Crash Was a Result of Organic Deleveraging

Analysts have offered differing views on the causes of Friday’s record $19 billion crypto market liquidation. While some argue that the event was a result of organic deleveraging, others have accused market makers of exacerbating the crash. The liquidation event caused significant turmoil, leaving traders divided on the underlying factors behind the dramatic market movement.

According to data from DefiLlama, the flash crash saw open interest for perpetual futures on decentralized exchanges (DEXs) plummet from $26 billion to under $14 billion. Additionally, crypto lending protocol fees surged past $20 million, the highest daily total ever recorded. Weekly DEX volumes climbed to over $177 billion, and the total amount borrowed across lending platforms fell below $60 billion, marking a significant decrease since August. These figures underscore the scale of the market's reaction.

While some traders suggested that a coordinated sell-off by market makers, along with platform glitches and large participants, triggered the crash, blockchain data pointed to a more natural process. Analyst Axel Adler Jr., from the blockchain data platform CryptoQuant, suggested that most of the liquidation was a result of controlled deleveraging. During the crash, open interest saw a $14 billion decline, with 93% of it attributed to deleveraging rather than cascading liquidations.

Adler further noted that only $1 billion worth of long Bitcoin positions were liquidated, which he called “a very mature moment for Bitcoin.” However, despite this analysis, not all observers are convinced that the liquidation event was entirely organic. Some market participants have pointed fingers at major market makers, alleging they contributed to the crash by pulling liquidity from exchanges at critical moments, intensifying the market’s downturn.

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