$19B Vanished : What Really Happened In The Crypto Market ?

Last Friday, the crypto market experienced a brutal reversal, with nearly 19 billion dollars of open interest wiped out in a few hours. A correction of such magnitude, even in an ecosystem accustomed to volatility, immediately caught analysts’ attention and revived fears of an uncontrolled collapse. However, behind this spectacular drop, the first analyses reveal a very different scenario, that of a planned deleveraging rather than a generalized panic.

A Massive but Controlled Deleveraging

On Friday, October 11, the crypto market suffered a major decline with nearly 19 billion dollars of open interest liquidated in a few hours.

Indeed, the initial interpretations of the event suggested a cascade of automatic liquidations, a phenomenon often feared during overheated derivatives markets. However, the collected data offers a more nuanced reading, supported by several sector analysts.

Here are the highlights of this sequence :

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  Open interest on DEXs : a sharp drop, from 26 billion to 14 billion dollars ;

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  According to Axel Adler Jr. of CryptoQuant : “At least 93 % of this drop is the result of a controlled deleveraging, not a liquidation cascade” ;

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  Forced liquidations on bitcoin : only 1 billion $ of long positions were liquidated, suggesting a controlled management of leveraged exposures.

For Adler Jr. : “this is a very mature moment for Bitcoin”, referring to the relative stability of traders’ behavior despite the correction.

Following this rebalancing, other economic indicators highlight intense but orderly activity. Fees collected on lending protocols exceeded 20 million dollars in a single day, a historic record.

Meanwhile, weekly volumes on DEXs climbed to 177 billion dollars, while the amount borrowed via lending platforms fell below 60 billion, its lowest level since August. These elements reinforce the idea that the crypto market experienced, this time, a progressive leverage withdrawal rather than an uncontrolled collapse.

A Strategic Liquidity Withdrawal ?

However, this calm reading is not unanimous. Several independent traders and analysts question the idea of a purely mechanical adjustment and point to the role of certain investors who allegedly exacerbated or even caused the crypto crash by withdrawing their liquidity at the most critical moment.

According to the on-chain researcher YQ, these withdrawals began at 9 p.m. UTC on Friday, one hour after Donald Trump’s statement threatening new tariffs. This timing fueled suspicions of a concerted action.

“Market makers started withdrawing their liquidity at 9 p.m., and by 9:20 p.m. most tokens had hit their lows. The market depth collapsed to only 27,000 dollars, a drop of 98%”, he states in a publication on X.

These on-chain data were corroborated by the Coinwatch platform, which also reports a 98 % drop in order book depth on Binance, the world’s largest exchange platform. According to their analysis, two of the three main market makers of a token listed on Binance (valued at over 5 billion $) deserted the order book for five consecutive hours before reactivating their bots.

“When the price dropped, the MMs withdrew everything. 1 hour 30 minutes later, Blue reactivated its bots. Turquoise came back, but minimally”, writes Coinwatch, which also states it is in contact with the involved market makers to “accelerate their return to the order books”.

While these accusations are difficult to formally prove, they raise questions about governance and transparency of crypto infrastructures. The sudden liquidity withdrawal at a pivotal moment, as evidenced by the chaos caused by Trump’s tariffs, could have systemic consequences, notably by weakening investor confidence in the crypto market’s resilience. Going forward, finer monitoring mechanisms and continuous presence obligations for liquidity providers on certain pairs could be considered.