Friday’s sale triggered which bitter portfolio manager Jonathan was called the worst liquidation event in crypto history, with more than $ 20 billion wiped out when liquidity disappeared and forced decomposition grabbed an article on X published on Saturday.
Perpetual Futures- “Perps” in trade in short-term cash-fixed contracts without expiry that mirrors spot via financing payments, not delivery. Profits and losses net against a shared margin pool, which is why in stress, venues may need to redistribute exposure quickly to keep books balanced.
Man, the leading portfolio manager for the bit of the Bitter strategy Alpha Fund, said Bitcoin dropped 13% from tip to trough for a single hour, while losses in the long-tailed tokens were far steeper-added that atom “fell to almost zero” at some venues before they rebounded.
He estimated that approx. $ 65 billion in open interest was deleted and reset positioning to levels last seen in July. The headline numbers, he argued, means less than plumbing: When uncertainty tips, liquidity providers expand quotes or step back to manage warehousing and capital, organic liquidations are clearing at bankruptcy prices, and venues are aimed at emergency tools.
According to man, exchanges in this situation leaned on safety valves.
He said that Auto relief kicked in at some venues, forcibly closing part of profitable counterpositions when there was not enough cash on the losing side to pay winners.
He also pointed to liquidity vault, which absorbs distressed flow – Hyperliquids HLP “had an extremely profitable day,” he said, bought with deep discounts and sold for spikes.
What failed and what contained
Man said that centralized venues saw the most dramatic dislocations as order books thin, and that is why the long tail-tokens broke harder than Bitcoin and Ether.
In contrast, he said that defi-liquidations were muted for two reasons: Large loan protocols tend to accept Blue-Chip security, such as BTC and ETH, and Aave and Morpho “Hardcoded USD’s price to $ 1,” the Cascade risk limits.
Although USDE remained solvent, he said it traded about $ 0.65 on centralized exchanges in the middle of illiquidity – leaving users who sent it as a margin at these venues that are vulnerable to liquidation.
In addition to directional dealers, man highlighted hidden exposures to market -neutral funds. He said that the real risks of days like Friday are operational – algorithms running, exchanges that hold up, accurate brands, the ability to move margin and perform hedges on time.
He checked in with several leaders who reported that they were doing well, but said he would not be surprised if “some C-tier trading teams were performed.”
Man also described unusually wide spread across venues with reference to $ 300-plus spread sometimes between binance and hyperliquid on ETH-USD.
Prices were recovered from extreme lownesses, he said, and placement of rinses created opportunities for dealers with dry powder. Man also mentioned that the markets with open interest were sharply sharply into the weekend on firmer foothold than the day before.
