TL;DR
- Market Reset: The $19B liquidation cut open interest nearly in half, while lending fees hit record highs and DEX volumes surged past $177B, showing the scale of the deleveraging.
- Analyst View: CryptoQuant’s Axel Adler Jr said 93% of the decline was controlled deleveraging rather than a cascade, with only $1B in Bitcoin longs liquidated, calling it a mature moment for the crypto market.
- Liquidity Concerns: Traders accused crypto market makers of pulling liquidity. Coinwatch reported a 98% collapse in Binance market depth as two of three providers stepped back, creating a liquidity vacuum.
A sudden $19 billion liquidation rattled the crypto market over the weekend, sparking debate over whether the event was a natural correction or a coordinated liquidity crunch. While traders voiced suspicions of manipulation, blockchain data suggests the downturn was largely a controlled reset rather than a cascading collapse.
During Friday’s crash, spot volume hit $44B (near cycle highs), futures $128B, while OI dropped $14B with only $1B in BTC long liquidations. 93% of OI decline wasn’t forced – this was a controlled deleveraging, not a cascade.
👉 A very mature moment for Bitcoin. pic.twitter.com/sTrziRUXXo
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) October 14, 2025
Record Liquidations and Market Impact
Open interest in perpetual futures plunged from $26 billion to under $14 billion, according to DefiLlama. Lending protocol fees surged past $20 million, marking the highest daily total ever recorded. Weekly decentralized exchange volumes also jumped above $177 billion, while borrowed funds across lending platforms fell below $60 billion for the first time since August. These figures highlight the scale of the deleveraging and its ripple effects across decentralized finance.
Analysts Point to Controlled Deleveraging
Despite the dramatic numbers, analysts argue that the majority of the $14 billion decline in open interest was not a cascading liquidation. Axel Adler Jr of CryptoQuant said at least 93% of the decline represented “controlled deleveraging, not a cascade.” Only $1 billion in long Bitcoin positions were liquidated, which Adler described as a “very mature moment for Bitcoin.” He suggested the market absorbed the shock with relative stability, underscoring a shift toward more resilient trading behavior.
Market Makers Under Scrutiny
Not all observers share that optimism. Several traders accused major crypto market makers of worsening the downturn by withdrawing liquidity at critical moments. Blockchain researcher YQ reported that market depth collapsed by 98% on tracked tokens after 9:00 pm UTC, shortly after tariff threats from President Donald Trump. By 9:20 pm UTC, most tokens had bottomed, leaving exchanges with just $27,000 in visible depth.
Liquidity Vacuum Raises Concerns
Coinwatch data reinforced these claims, noting a 98% collapse in market depth on Binance. The platform said two of three market makers deserted their roles for hours, creating what it called a “liquidity vacuum.” Although some liquidity later returned, the episode has fueled debate about whether the crash was a natural correction or a coordinated move by insiders.
