Experts suggest the record crypto liquidation was a natural reset, though traders accuse market makers of deepening the sell-off
The record $19 billion crypto market liquidation that shocked traders on Friday may not have been a chaotic collapse after all. According to on-chain analysts, most of the move represented a controlled deleveraging cycle — not a cascading liquidation.
Data from DefiLlama shows that open interest in perpetual futures on decentralized exchanges fell from $26 billion to below $14 billion, marking one of the sharpest resets in recent crypto history. Lending activity also slumped, with total borrowed capital dropping below $60 billion for the first time since August, while DEX trading volume surged past $177 billion for the week.
“At least 93% of the open interest decline was controlled deleveraging, not forced liquidation,” said Axel Adler Jr, analyst at blockchain data firm CryptoQuant. “Out of the $14 billion decline, only around $1 billion in Bitcoin longs were actually liquidated — a very mature moment for Bitcoin.”
The analyst suggested the correction reflected traders unwinding leveraged positions rather than mass panic selling.
Still, some market watchers see a different story. Several blockchain researchers accused market makers of pulling liquidity at key moments, amplifying volatility and accelerating the crash.
Blockchain sleuth YQ claimed that “liquidity vanished almost instantly” across major exchanges on Friday night. “Market makers began withdrawing liquidity around 9:00 pm UTC, and by 9:20 pm, market depth had collapsed 98% to just $27,000,” YQ wrote on X.
Similarly, Coinwatch, a blockchain data platform, noted that Binance’s market depth fell sharply as two of the three primary market makers “deserted their responsibility for several hours,” before returning to normal levels later that night.
The event underscores the fragility of crypto market liquidity, particularly during macro shocks such as U.S. tariff threats and high leverage positioning. Whether it was a coordinated pullback or a natural correction, experts agree that the market’s ability to recover in the coming days will test its structural maturity.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.