$19B crypto market crash was ‘controlled deleveraging,’ not cascade: Analyst

Analysts indicated that the recent $19 billion liquidation in the crypto market was primarily an organic deleveraging rather than a sudden cascade. On October 14, a significant drop in open interest for perpetual futures was noted, declining from $26 billion to under $14 billion, coinciding with a surge in crypto lending protocol fees and a decline in total borrowing across platforms. While some traders suspected a coordinated sell-off by market makers, blockchain data showed that at least 93% of the $14 billion decline was due to controlled deleveraging, particularly impacting long Bitcoin positions. Despite this perspective, critics argued that market makers exacerbated the situation by withdrawing liquidity, creating a liquidity vacuum that intensified the crash. Order book data indicated that market makers halted their activities right after a geopolitical announcement, leading to a drastic drop in market depth. The disparities in opinions highlight ongoing debates within the crypto community regarding the nature and causes of major market events.

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