The Wolf Den #1201 - THE LARGEST CRYPTO LIQUIDATION EVER
$19B and counting.
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In This Issue:
THE LARGEST CRYPTO LIQUIDATION EVER
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
The ETH Entry Queue Has Jumped
Tom Lee Says Buy The Dip
Steak ‘n Shake Makes A Valid Point
$1,000,000 Bitcoin & The Death Of The 4-Year Cycle | Arthur Hayes & Allan Marshall
THE LARGEST CRYPTO LIQUIDATION EVER
This one’s going to be long – probably one of the longest things I’ve ever written.
Usually, when a story is this obvious, staring right back at me, the words pour out easily. But today feels different. I don’t just want to react to the news – I want to connect the dots, to pull the entire picture into focus.
It’s Saturday afternoon as I sit down to write – one night removed from the crash – and I couldn’t wait any longer to start. The full piece won’t be finished today. I’ll wait for more details to surface. But I had to begin while everything still feels fresh. I’ve learned that’s when the writing hits closest to the truth.
I promised myself I’d keep the preamble short to leave room for what matters – the story itself. So the rest of this post will unfold like a live feed: a timeline of what happened, how it happened, and the thoughts that came with it.
“Technically” – and yes, picture the air quotes – this is where it all began. Though I don’t think Trump’s post caused what followed, it was the spark that finally hit an already dry haystack.
It’s important to note that Trump’s post went out at 5:00 p.m. ET on a Friday – the absolute worst time imaginable for major world news to hit crypto. Liquidity was thin, traders were heading into the weekend, and the market’s reflexes were slowing down just as volatility tends to spike – a perfect recipe for disaster.
Still, Trump didn’t break crypto – crypto broke crypto.
What Trump’s decision means for legacy markets won’t be clear until Monday’s open. There was some after-hours selling across major equities, but nothing remotely close to the carnage in crypto. Monday will be telling – especially if Trump suddenly reverses course on Truth Social, or doubles down and hikes the tariff to 200%.
(Spoiler: we got the former.)
For the record, nobody saw this decision coming – and I mean nobody in the broader trading world. Maybe a Trump insider got ahead of it (spoiler again: they did), but for everyone else, it was a clean right hook that landed while our backs were turned.
Now, let’s talk crypto.
The reaction – especially from alts – was unlike anything I’ve ever witnessed. Nothing even comes close.
Think back to the China mining ban. The COVID crash. LUNA, FTX, Voyager, GBTC, Celsius – take your pick. Every one of those moments felt like the end of the world at the time. But this? This was different. Completely different in both speed and scale.
Some altcoins didn’t just fall – they vaporized, dropping 99.99% in minutes (yes, literally). ETH and SOL each plunged around 20%, which was mild compared to most. Mid-caps collapsed 40–50%, and several larger names temporarily cratered as much as 80% – like it was nothing.
And the liquidations… we’ve never seen anything like it. Billions erased in hours. Charts looked broken. Exchanges lagged. Feeds froze. It wasn’t just a crash – it was a total system overload.
I’m getting ahead of myself.
Below is a screenshot from Coinglass:
For context, the COVID crash saw about $1.2 billion in liquidations. The FTX collapse? Roughly $1.6 billion.
Friday alone: $19.16 billion.
Let that sink in. That’s not just a record – it’s a completely different scale. Nearly twelve times larger than anything this market has ever absorbed.
To be fair, as crypto grows, so do the numbers. More traders, more leverage, more interconnected positions. But even accounting for that, this wasn’t just a “bigger” move – it was a complete structural flush. The kind of event that forces everyone to stop, reprice risk, and rethink what’s actually possible (and broken) in this market.
Here’s a look at some of the lows:
TON: $0.55 • XRP: $1.25 • LDO: $0.25 • AVAX: $8.40 • LINK: $8.00 • DOGE: $0.09 • ADA: $0.30 • XLM: $0.16 • AAVE: $81 • TAO: $120 • ONDO: $0.24 • WLD: $0.26 • ICP: $1.80 • ARB: $0.10 • TRUMP: $1.50 • INJ: $2.73 • AERO: $0.28 • TIA: $0.23 • EIGEN: $0.54 • W: $0.023 • SUSHI: $0.15 • ATOM: $0.001 • SUI: $0.56 • APT: $0.75 • SEI: $0.07
A few highlights:
XRP plunged to $1.25. Let that register. This isn’t some illiquid microcap – it’s the fifth-largest altcoin, still worth roughly $148 billion even after rebounding. In minutes, it fell from $2.82 to $1.25 – a 55.7% collapse.
SUI dropped from $3.25 to $0.55 – an 83% crash.
ATOM literally hit $0.001. That’s not a wipeout – that’s something breaking.
Leveraged traders took the worst of it. Retail was hit too, but nowhere near as hard.
Most new investors today buy spot on centralized exchanges or through ETFs – they’ll barely feel this move. Prices, in reality, just rolled back a couple of weeks. (I mentioned this on X already.) The last time Bitcoin traded at these levels was late September; for Ethereum, early August. Under normal circumstances, this would look like a healthy bull market pullback – a sharp reset before the next leg higher.
If not for the sheer violence of it – altcoins plunging 80% or more – we could’ve written it off as Trump shaking risk assets.
And how about BNB and Tron? They barely flinched. People will say it’s because of concentrated supply or tight liquidity, but still – remarkable. BNB is actually trading higher now than when this all began. These coins seem to live in their own world, and maybe that says something about where they’re headed.
The real damage, though, was dealt to crypto natives and high-leverage traders on decentralized exchanges – as always.
Institutional players are insulated. They’re not watching charts or glued to X. Retail is fine as long as they held through it. The ones who’ll remember this are the degens who got liquidated.
To make matters worse, the narrative leading into this week revolved around Aster – an up-and-coming perp DEX rivaling Hyperliquid. Both cater to the same crowd: aggressive, leverage-hungry traders chasing volatility.
And the timing couldn’t have been worse. Those tokens had been ripping, drawing in more users. While I don’t have the exact data, I’d bet leverage popularity and open interest were near record highs – the perfect setup for something to snap, or for someone to push it until it did.
Which brings us to the hardest question: what actually happened?
That’s where the consensus breaks down.
Theories are everywhere. Some say it was a coordinated attack – insiders who knew exactly when to strike. Others think it was simply structural failure: cascading liquidations overwhelming an already fragile system.
I won’t go too deep into either theory – X is flooded with takes, and I’m neither a conspiracy theorist nor a perpetuals mechanic expert.
That said, there’s truth on both sides. It’s clear some insiders had advance knowledge and poured gasoline on the fire – nothing new in crypto.
It is also now a fact that exchanges are basically admitting fault:
And as a result of all this, the term of the week is… ADL.
The massive wave of liquidations forced exchanges to hit their nuclear button – Auto-Deleveraging, or ADL.
ADL kicks in when the order book simply can’t keep up, a last-resort mechanism to keep the exchange solvent. In plain English: there weren’t enough buyers to absorb all the forced selling from liquidated longs. So exchanges flipped the switch – automatically closing profitable short positions to offset losses and restore balance. It’s essentially unwilling market making – one moment you’re deep in profit, the next, the exchange force-closes your trade to plug a liquidity hole.
That’s why anyone using even modest leverage got obliterated. Stop losses didn’t just fail – they were bulldozed straight through.
Still, plenty of questions remain. Why did exchanges stop processing orders? Why did fees suddenly spike 10x or 20x? How did some coins literally drop 99.99% in seconds? Do certain tokens really have no buy orders in place?
And maybe the biggest mystery of all – did anyone actually manage to catch those bottoms? The real ones, where prices were down 80%, 90%, even 99% – the blink-and-you-miss-it prints that barely seem real?
We are going to need a lot more than this.
It’s going to take time for the market to piece together what really happened - and for exchanges to admit a little more than, “we experienced transaction issues.” Discussions are far from over - they are going to unfold over days, maybe weeks, as the market processes what actually happened. But if prices recover quickly, most people will quickly move on and forget.
Short-term memory loss runs deep in this industry - especially when prices rise.
From here, I want to wrap up this intro with a handful of quick thoughts - starting with a post I came across that makes for a brief but interesting discussion.
The “$15 billion in liquidations” figure (actually closer to $19 billion) doesn’t mean traders collectively lost $19 billion. It represents the notional value of all leveraged positions that were force-closed as prices collapsed.
In reality, the capital actually lost is just a fraction of that. Traders only lose their margin – their collateral – not the full value of their leveraged trade.
For example: if someone posted $100 in margin on a $2,000 position and got liquidated, they lost $100 – not $2,000.
Still, $19B in liquidations is a huge deal because it reflects a tidal wave of forced selling that crushed prices lower, triggered more liquidations, and briefly broke parts of the market’s plumbing. So while the headline number sounds apocalyptic, the real story isn’t about the total dollars lost – it’s about the violent feedback loop that formed and how fast it tore through the system.
For comparison, the infamous “$9 billion hole” at FTX was real – an actual balance-sheet shortfall of customer funds. FTX took user deposits (real dollars, Bitcoin, ETH, etc.) and used them for reckless bets through Alameda Research. When users tried to withdraw, the money simply wasn’t there.
And finally – this part drifts a bit into conspiracy territory, but I’ll say it anyway – some of what we just saw doesn’t fully add up. There are gaps, anomalies, and timing oddities that make you wonder whether we’ll ever get the full story. Here’s one theoretical explanation.
And of course, going way down the rabbit hole…
On another note, Mike McGlone’s timing was nothing short of uncanny. He nailed his prediction almost to the hour. Yes, he’s been calling for a Great Depression for years, but Thursday evening was the first time I ever heard him says “sell everything now.” He’s a guest on Macro Monday and will be back again today. We will definitely be talking about this.
Here’s a highly detailed technical thread on ADL for those who want to dig deeper - it’s worth a read if you’re into the mechanics behind what actually happened.
Maybe most important - let’s do a quick reality check.
If you were liquidated in this drop, it sucks - truly. I’m sorry. But leverage is a tool that 99.9% of traders should stay far away from. I will say this until I die. It offers the illusion of control right up until the moment it takes everything away. Events like this are a harsh reminder of what really matters in crypto: staying grounded, staying patient, and staying in the game.
Skip the leverage and stop FOMOing into alts. Keep your main holdings in the top few assets and use self-custody or multi-sig to keep your wallet security tight. If you know you are going to trade, keep your degen bag small - like 10% or less. Pullbacks of 20–40% are normal during bull markets, not a crisis. And last, but not least, dips are for buying, not for panicking.
Next, the rumors surrounding CZ and Wintermute are loud, but the evidence is unclear. As stated above, Binance has admitted some fault for system failtures, and they are apparently already compensating users.
And of course - it looks like what started all this will end up being a nothing burger. Love him or hate him, Trump isn’t responsible for crypto’s shortcomings - we are.
I don’t think the bull market is over – despite what some are claiming. A leveraged flush in altcoins, Trump spooking the market, and a few exchanges temporarily breaking down don’t change the bigger picture.
Bitcoin’s long-term growth story remains intact. Governments are inching closer to accumulation, the debasement trade is alive and well (even if everyone seems to have forgotten it), and prices should keep rising as the Fed cuts rates and fires up the printers again. In my view, nothing about the long-term thesis has changed.
I’ll reconsider if we slip into a real recession or if something truly systemic breaks – but for now, my bias remains up. Directionally bullish, though not necessarily immediately.
There will be bumps along the way – there always are.
Just remember: crypto has never been easy. That’s exactly why there are still gains to be made. It often feels like the gods are throwing darts at random, deciding who to punish next – and unless you’re nearly perfect, eventually, one will hit you.
Stay safe out there. More turbulence could easily hit this week in either direction. I’ll be back here in 24 hours with updates.
Bitcoin Thoughts And Analysis
Bitcoin’s rebound from Friday’s historic flush has been remarkable. After one of the largest liquidation events in crypto history, price wicked all the way down to the 200-day EMA near $106K — a level that’s been rising steadily throughout the year — before bouncing sharply. That deep tag of the long-term moving average looked like true capitulation, with heavy volume confirming forced selling rather than panic from long-term holders. Now trading back above the 50-day MA and just below key resistance around $117K, Bitcoin sits at a crucial inflection point. A decisive daily close above $117K would likely confirm that the market has absorbed the shock and open the door for a move back toward $124K. For now, expect consolidation between $111K and $117K as leverage resets and confidence rebuilds. The broader uptrend remains intact — this was a structural flush, not a trend break
Interesting detail. Friday’s crash wasn’t even the highest-volume day for Bitcoin on Coinbase this summer. There were two bigger days in July – and on both, price barely moved. Small dips, quickly bought up. That tells you everything about what happened last week. This wasn’t a broad-based selloff – it was a leverage event. A chain reaction of forced liquidations, not spot panic. It also suggests that during the worst of the drop, trading on spot exchanges may have been partially frozen – meaning real buyers couldn’t step in even if they wanted to.
Altcoin Charts
It will be difficult to share any clear altcoin charts until the dust settles from last week.
Legacy Markets
US stocks rebounded after President Trump softened his stance on China – hinting at a willingness to negotiate following Friday’s tariff threats. S&P 500 futures rose 1.2% and Nasdaq 100 contracts jumped as much as 2.3%, recovering part of the market’s steepest drop since April. Gold hit a new record above $4,070 an ounce, while silver surged amid a historic short squeeze in London.
The rally reflected growing belief that Trump’s 100% tariff threats were a negotiation tactic rather than policy. Still, with valuations stretched after this year’s massive AI-driven run, traders expect volatility ahead of earnings season. JPMorgan, Goldman Sachs, and Citigroup report Tuesday – with options implying a 4.7% average swing, the largest since 2022.
Morgan Stanley warned the S&P 500 could fall another 8–11% if trade tensions persist into November. Meanwhile, investors will be watching the IMF and World Bank meetings for clues on global policy, as central bankers continue to caution that the AI-fueled rally may be overextended.
Key economic events this week:
Monday, October 13
– U.S. markets partially closed for Columbus Day (no Treasury cash trading)
– IMF and World Bank autumn meetings begin in Washington
– French President Macron expected to name new prime minister
Tuesday, October 14
– U.S. banks kick off Q3 earnings: JPMorgan, Goldman Sachs, Citigroup report
– Federal Reserve officials speak on policy outlook
– China economic data (trade balance, exports, imports)
Wednesday, October 15
– U.S. PPI (Producer Price Index) — inflation gauge for wholesale prices
– Ongoing IMF/World Bank meetings with G7 and emerging-market finance ministers
– Eurozone industrial production data
Thursday, October 16
– U.S. CPI (Consumer Price Index) — key inflation data (subject to release delays from shutdown)
– Jobless claims report
– Tesla earnings preview chatter intensifies ahead of Oct. 22 report
Friday, October 17
– University of Michigan consumer sentiment survey
– Fed Chair Jerome Powell scheduled remarks
– IMF meetings conclude — global economic outlook report released
Some of the main moves in markets:
Stocks
S&P 500 futures rose 1.4% as of 6:31 a.m. New York time
Nasdaq 100 futures rose 1.9%
Futures on the Dow Jones Industrial Average rose 0.9%
The Stoxx Europe 600 rose 0.5%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.3% to $1.1587
The British pound fell 0.2% to $1.3336
The Japanese yen fell 0.7% to 152.19 per dollar
Cryptocurrencies
Bitcoin was little changed at $114,937.36
Ether rose 0.3% to $4,153.47
Bonds
Germany’s 10-year yield declined one basis point to 2.63%
Britain’s 10-year yield declined two basis points to 4.65%
Commodities
West Texas Intermediate crude rose 2% to $60.06 a barrel
Spot gold rose 1.4% to $4,074.54 an ounce
The ETH Entry Queue Has Jumped
I haven’t been able to find any clear explanation for why the entrance queue has spiked. The news has been completely overshadowed by everything else, and it definitely can’t be attributed to Grayscale’s new ETH staking ETF - they only staked about 32,000 ETH, which is just a small fraction of what’s sitting in the queue.
Tom Lee Says Buy The Dip
The interview above wasn’t about crypto - it took place right before the Trump announcement that nuked the market, and it focused solely on legacy markets. Tom Lee said the following:
“I think it’s a good flush that’s happening today. I would like to say the market is concerned, but unless there is a real structural change, this pullback is a buying opportunity… If someone says are we going to be higher a week from today, I would say the odds are very good.”
Tom Lee went on to buy ~138,000 ETH over the weekend - roughly $487 million worth - all within about 24 hours.
Steak ‘n Shake Makes A Valid Point
Steak ’n Shake trolled the crypto community this weekend - posting a poll on X asking if they should accept ETH payments, only to flip shortly after and reaffirm their allegiance to Bitcoin. On its own, their participation doesn’t move the needle for either BTC or ETH, but there’s a bigger message behind it - and Vitalik gets right to the heart of it below.
Props to Vitalik for making this point. He could’ve easily dismissed Steak ’n Shake’s decision or ignored it altogether - it’s well below his level of concern - but instead, he used the moment to clearly state what he believes in.
$1,000,000 Bitcoin & The Death Of The 4-Year Cycle | Arthur Hayes & Allan Marshall
In this exclusive conversation, Arthur Hayes, co-founder of BitMEX, and Allan Marshall, CEO of Upexi, break down the rise and fall of Bitcoin treasury companies, why only a few will survive, and how fiat liquidity - not halving cycles - truly drives Bitcoin’s future. They reveal how government money printing, the debasement trade, and passive inflows could push Bitcoin toward $1 million, while mismanaged treasuries implode under leverage. A must-watch for anyone who wants to understand the real macro forces shaping crypto’s next supercycle.
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