$19 Billion Crypto Liquidation: An Organic Correction or a Manipulated Collapse?
The recent $19 billion liquidation in the crypto market has sparked debate among traders, with differing views on whether it was a natural correction or a controlled sell-off by market makers.
On Friday, the crypto market witnessed a staggering liquidation event totaling $19 billion, leading to divided opinions among traders. Some traders suspect a coordinated effort by market makers, while others believe it was a more organic deleveraging process.
During this event, open interest for perpetual futures on decentralized exchanges (DEXs) plummeted from $26 billion to under $14 billion, as noted by DefiLlama.
The surge in fees across crypto lending protocols exceeded $20 million, marking a record high for daily totals, while weekly DEX volumes soared past $177 billion. Total borrowing on lending platforms also fell below $60 billion for the first time since August.
Source: DefiLlama
Although multiple traders cited concerns over platform glitches and a potential coordinated market correction, blockchain data implied that the majority of the liquidation was organic.
Adler Jr. stated that even though $14 billion was wiped off the open interest, 93% of this drop was a controlled deleveraging rather than a cascading event. Out of this amount, only $1 billion in long Bitcoin (BTC) positions were liquidated, illustrating a mature moment for Bitcoin according to Adler’s analysis.
Source: Axel Adler Jr
Market observers remain skeptical, with some asserting that significant market players may have played a role in the crash by withdrawing liquidity at critical moments. Notably, data reveals that market makers allegedly initiated a “liquidity vacuum” that intensified the market’s correction as they began pulling liquidity shortly after US President Donald Trump made a tariff announcement.
Source: YQ
According to Coinwatch, the market depth on Binance, the largest cryptocurrency exchange, saw a massive 98% collapse, coinciding with a similar behavior of other market makers pulling their liquidity. A token valued over $5 billion was flagged, with two out of three market makers allegedly neglecting their responsibilities for several hours as prices plummeted.
Source: Coinwatch
In summary, while there are conflicting views about the nature of the $19 billion liquidation, the event has certainly highlighted the volatility and intricacies of the cryptocurrency market.
