A Most Curious Incident (of Market Carnage)
- So, young Jonathan Man at Bitwise estimates a trifling $20 billion simplyā¦ evaporated. Goodness. A mere inconvenience, really. And Bitcoin had a little wobble, dropping 13% for a spot of tea.
- $65 billion in open interest? Gone. Poof. Back to July levels. Apparently, some books were ratherā¦sparse. Like a Russian novel with a missing chapter.
- DeFi guardrails and fixed USDe pricing saved the day (sort of). Perhaps a small victory in the grand cosmic joke?
Ah, Friday. A day for forgetting, for long walks, for *not* looking at your crypto portfolio. Because that’s when the market decided to stage a dramatic performance of financial self-destruction, orchestrated, it seems, by unseen forces. Jonathan Man, a portfolio manager at Bitwise, has bravely attempted to piece together the wreckage, and published his observations on that infernal X platform. He calls it the worst liquidation event in crypto history. A bold claim! Though, frankly, they seem to say that every other week these days. š
These āperps,ā as the cool kids call them – perpetual futures, for those of us who haven’t quite mastered the argot – are curious things. Cash-settled, you see. No actual delivery. Just a shifting of numbers, a dance of imaginary wealth. And when the music stops, wellā¦ letās just say some dancers are left without chairs.
Apparently, Bitcoin took a 13% tumble in a single hour. A mere dip, some might say. But ATOM? Poor ATOM. Man claims it āfell to virtually zeroā on certain exchanges before staging a miraculous return. A tragicomedy in one token.š
The numbers areā¦ substantial. $65 billion in open interest vanished. But Man insists that the *plumbing* is the true story. When panic sets in, the liquidity providers hide. Organic liquidationsā¦ cease to be organic. And the exchanges resort to desperate measures, which, one suspects, are rarely elegant.
What Held (and What Didnāt)
Centralized venues, predictably, bore the brunt of the chaos. Order books thinner than a politicianās promise. Long-tail tokens took a beating. Because, naturally, the obscure always suffer first.
DeFi, bless its algorithmic soul, fared slightly better. Blue-chip collateral – Bitcoin and Ether, the usual suspects – provided a buffer. And Aave and Morpho, in a stroke of bureaucratic genius, āhardcoded USDeās price to $1.ā A temporary fix, perhaps, but enough to stave off complete meltdown.
USDe still traded at a ludicrous $0.65 on the CEXes, leaving those foolish enough to use it as marginā¦ well, let’s just say they learned a valuable lesson. (Namely, don’t).
But the real peril, Man points out, lies not in directional bets, but in operational risks. Algorithms misfiring. Exchanges collapsing under the strain. Margin calls gone awry. He checked with a few managers, those fearless titans of finance, and they reportedā¦ everything was *fine*. Of course it was. But he wouldnāt be surprised if āsome c-tier trading teams got carried out.ā A delightfully blunt assessment. šµļø
And the spreads! Good heavens, the spreads! $300 between Binance and Hyperliquid on ETH-USD. A chasm of opportunity for the quick-witted, and a yawning pit of despair for the slow. But the situation did improve, by the end. Positioning was flushed out. Opportunities arose. And the markets, battered but not broken, limped into the weekend. One almost feelsā¦ sympathy. Almost. š
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2025-10-12 03:49