The crypto market faced its biggest leveraged wipeout in history last weekend, but the turbulence won’t leave a lasting mark, according to Bitwise chief investment officer Matt Hougan.
In a Tuesday blog post, Hougan described the sharp drop as “a blip” and not a big deal. He added that crypto “got a passing grade” in its handling of the sell-off.
“Many DeFi platforms performed flawlessly: Uniswap, Hyperliquid, Aave and others reported no losses,” he wrote, while noting that Binance and some other exchanges faced issues. “Taken together, crypto did as well or better than traditional markets would have done in the same situation,” he said.
The crash occurred after US President Donald Trump threatened to impose 100% tariffs on Chinese imports, sparking fears of a trade war. Bitcoin (BTC) plunged nearly 15%, while altcoins like Solana (SOL) dropped as much as 40%. Roughly $20 billion in leveraged positions was liquidated.
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Damage was “contained”
By Monday, Bitcoin rebounded to around $115,000, almost erasing the weekend losses. Hougan said the rapid recovery indicates the strength of blockchain infrastructure. “The damage was contained to individual investors,” he added, noting that no major institutions collapsed during the event.
The Bitwise exec said the sell-off was mostly fueled by highly leveraged traders rather than fundamental shifts. He claimed nothing fundamental to crypto’s outlook, including its underlying technology, security or the regulatory environment, had changed.
“Over time,” Hougan concluded, “I expect the market will catch its breath and renew its attention on crypto’s fundamentals. When that happens, I think the bull market will continue apace.”
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Analysts split over record crypto liquidation
Meanwhile, analysts are divided over Friday’s record crypto market liquidation. Some have accused major market makers of orchestrating a coordinated sell-off, while others have called it a natural deleveraging event.
The flash crash sent open interest in perpetual futures plummeting from $26 billion to under $14 billion, while decentralized exchange (DEX) trading volume surged past $177 billion, and crypto lending fees hit an all-time high of $20 million.
Analysts at CryptoQuant said the data suggested an orderly market reset rather than a panic-driven collapse. Of the $14 billion wiped from open interest, roughly 93% represented controlled deleveraging, and only $1 billion in Bitcoin longs were liquidated.
However, some observers blamed liquidity withdrawal by market makers for deepening the crash. Blockchain investigator YQ said liquidity began disappearing from order books around an hour after Trump’s tariff threat, creating a “liquidity vacuum” that saw market depth fall 98% before prices bottomed out.
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