Analyst Says $19B Crypto Crash Was a ‘Controlled Deleveraging,’ Not a Market Meltdown

Key Highlights:

• Analysts describe the record $19 billion liquidation as an “organic deleveraging cycle” rather than a coordinated market collapse.

• Open interest across perpetual futures fell by nearly $12 billion, but data suggests 93% of it was managed rather than panic-driven.

• Some traders, however, accuse major market makers of pulling liquidity at critical moments, worsening the price drop.

A Record Liquidation Sparks Debate

The crypto market’s $19 billion wipeout on Friday — the largest single-day liquidation event in digital asset history — has reignited debate over what truly drives extreme volatility in crypto markets. While some traders cried manipulation, analysts say the event was a “controlled deleveraging,” signaling greater structural maturity than past meltdowns.

Data from DeFiLlama showed that open interest in perpetual futures across decentralized exchanges plunged from $26 billion to under $14 billion in a matter of hours. Meanwhile, decentralized exchange (DEX) trading volumes surged past $177 billion for the week, and crypto lending fees hit $20 million on Friday — the highest daily total ever recorded.

Despite the dramatic figures, most blockchain analysts say the market behaved as it should. The event was painful, but not catastrophic.

Analysts See Organic Market Reset

According to Axel Adler Jr, an analyst at CryptoQuant, roughly 93% of Friday’s deleveraging appeared to be “controlled,” meaning positions were unwound in an orderly fashion as leverage levels adjusted across exchanges.

“Out of the $14 billion decline in open interest, only around $1 billion in long Bitcoin (BTC) positions were actually liquidated,” Adler noted in a post on X. “That’s a very mature moment for Bitcoin — it shows the market absorbed stress without cascading failures.”

At the time of the crash, Bitcoin traded as low as $111,197, before recovering above $115,000 over the weekend. Analysts interpret the rebound as proof that market infrastructure, risk management, and trading systems are handling stress better than in earlier cycles.

However, not everyone agrees that the episode was purely mechanical. Several traders accused major market makers (MMs) of worsening the sell-off by withdrawing liquidity during the most volatile period.

Liquidity Vacuum and Market Maker Scrutiny

Blockchain investigator YQ reported that market makers began pulling liquidity around 9:00 p.m. UTC, roughly an hour after former U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports — the initial catalyst for the sell-off.

By 9:20 p.m., most tracked tokens had bottomed, while market depth collapsed 98%, to just $27,000, according to YQ’s data. This “liquidity vacuum” amplified price swings as bids disappeared from order books.

Independent analytics firm Coinwatch confirmed similar findings, noting that Binance’s market depth plunged nearly 98% during the sell-off. “When the token price crashed, both MMs pulled everything from the books,” Coinwatch stated in an X post. “One and a half hours later, bots came back online and restored normal liquidity levels.”

Coinwatch also revealed that two out of three market makers for a Binance-listed token worth over $5 billion had “deserted their responsibility for nearly five hours,” though discussions were reportedly underway to “accelerate their return” to the books.

While these actions fueled suspicion among traders, most analysts argue that such liquidity withdrawals are defensive mechanisms, not evidence of coordinated manipulation. Market makers typically reduce exposure during violent swings to prevent slippage or forced losses.

Controlled Stress Test or Warning Sign?

The diverging interpretations of Friday’s crash highlight a broader truth: crypto remains an evolving, high-beta asset class. While the system now demonstrates greater resilience and risk discipline, liquidity fragility continues to magnify price movements.

For long-term investors, the episode served as a stress test of structural integrity. Despite record liquidations, core protocols remained stable, lending markets functioned normally, and capital quickly rotated back once the panic subsided.

As markets digest the event, attention now turns to whether volatility clusters like this will become a feature of the maturing crypto landscape — or whether regulatory and infrastructure improvements will eventually tame the emotional swings that still define digital assets.