Arthur Hayes Explains the Chain Reaction
BitMEX co‑founder Arthur Hayes said the crash wasn’t only about panic selling but also about how centralized exchanges handle margin trading.
“Word on the street is that big CEX’s auto liquidation of collateral tied to cross‑margined positions is why lots of alts got smoked on the move down,” Hayes wrote. “Congrats to all you stink bidders. We won’t be seeing those levels any time soon on many high‑quality alts.”
This actually makes a lot of sense and is the most plausible reason for the marketwide alt bloodbath.
— CrediBULL Crypto (@CredibleCrypto) October 11, 2025
Forced selling of all kinds of alts that were being used as colateral to back leveraged positions on CEX’s as those positions began to get liquidated. This set up is exactly… https://t.co/HYsOnBpMM6
In simple terms, when traders use altcoins as collateral for leveraged positions and prices drop, exchanges automatically sell those coins to cover losses. Once that process begins, it creates a chain reaction of forced selling across multiple assets.
“It Makes Perfect Sense,” Says CrediBULL Crypto
Market analyst CrediBULL Crypto agreed with Hayes, calling it the most likely explanation for the market‑wide crash.
“When leveraged positions backed by alts started to unwind, those assets had to be sold,” he said. “Because altcoins have low liquidity, it quickly turned into a domino effect – one liquidation triggering another across the board.”
He added that many of the “wick lows” seen during the crash were formed by forced selling, not by voluntary market activity. “There’s basically no one left to sell at those prices,” he said.
A Brutal But Healthy Reset
The liquidation wiped out months of speculative leverage, but some analysts believe it may also have created a clean slate for a healthier market.
“Spot holders are fine,” CrediBULL noted. “If you managed to buy during the dip, you probably picked up some high‑quality coins at prices we won’t see again for a long time.”
After the crash, Bitcoin price is trading below $115 k, while ETH is well‑below $4 k. The October 2025 event will be remembered as one of the most violent and mechanical crashes in crypto history – a perfect storm of panic, leverage, and automated liquidations.