The crypto market experienced one of its most historic meltdowns on Friday, with a series of tensions around the globe, trading glitches, and high leverage triggering the biggest liquidation event in history, with almost 19 billion wiped out in forced liquidations. Bitcoin dropped to approximately $110,000 for a short period and the aggregate market worth dropped to nearly $450 billion and climbed back to over $4 trillion.
The ideal storm: tariffs encounter turbulence
It all started when the U.S. President Donald Trump threatened to levy a 100 percent tariff on Chinese imports as early as Nov. 1. The shift shook the world markets and sparked off fears of trade war. The stock markets crashed in all directions: the Nasdaq-100 dropped 3.49, the S&P 500 dropped 2.71, the Dow Jones dropped 1.9.
Bitcoin followed suit, dropping nearly 4 percent in the U. S. market and rolling losses overnight. However, the next thing was way beyond macroeconomics.
Binance glitch is like a petrol on the fire
Analysts posit that the actual mayhem came once market closures, when the Binance oracle of prices failed in pricing assets such as USDe, wBETH and BNSOL. The synthetic dollar USDe by Ethena momentarily collapsed to $0.65 in Binance, but it maintained its peg in other markets.
This was a pricing mistake making leveraged positions on the various platforms implode. As numerous exchanges rely on the price feed provided at Binance, the false information disseminated quickly, resulting in liquidations much more than Binance itself.
Haseeb Qureshi, an investor in Cryptocurrency Dragonfly, claimed that USDe had never been depegged and instead, Binance API glitches and no mint-and-redeem channel made it impossible to stabilize.
As it was later disclosed by Binance, certain modules did not behave correctly during the incident but its systems did not collapse altogether. The exchange paid compensations to users that were affected about 283 million and revised its model pricing before it could make future mistakes.
Hyperliquid justifies itself under criticism
The decentralized stock exchange Hyperliquid, who had performed much of the liquidation volume, came in the limelight as well. CEO Jeff Yan came to the defense of the platform by claiming it had worked just as intended, had never gone down and had not lost money despite ruin in the market.
Yan had attributed too much leverage and violent price moves but not the failure of a platform. He refers to any efforts to gaslight users regarding the role of Hyperliquid as unethical with the emphasis that onchain transparency is the reason why it is resilient.
Insider suspicions rise
To make the mess even more interesting, blockchain records showed a whale trader, who opened a huge short position on Hyperliquid minutes prior to the announcement of the tariffs by Trump, and cashed in a profit of $192 million. It would later open a different wallet against Bitcoin, where there are millions in unrealized gains, where it shorted another $163 million.
It is not clear whether this trader had inside knowledge or just a mere coincidence, but one thing is certain the weekend crash in the crypto market was a strong message that in a leveraged, oracle-driven, and algorithm-driven world, a single glitch or policy shock can shake the entire market.
