$19B Crypto Market Crash: 'Controlled Deleveraging' Not ‘Cascade’
On Friday, the crypto market experienced a record $19 billion liquidation, triggering a sharp decline in open interest for perpetual futures from $26 billion to under $14 billion. Crypto lending protocol fees surged above $20 million for the day, setting a new record, and weekly DEX volumes topped $177 billion. The total borrowing across lending platforms fell below $60 billion for the first time since August. While some traders accused market makers of orchestrating a coordinated sell-off and exacerbating the crash by pulling liquidity, blockchain data indicates that 93% of the $14 billion open interest decline was a controlled deleveraging rather than a liquidation cascade. Only about $1 billion in long Bitcoin positions were liquidated, which analysts cite as a sign of maturity in the market. Order book data, however, shows a “liquidity vacuum” created when major market makers rapidly withdrew, leading to a 98% collapse in market depth on certain exchanges like Binance. While analysts debate the event’s organic versus coordinated nature, some market makers only gradually resumed liquidity provision hours after the selloff.
