Bitwise chief investment officer Matt Hougan said crypto markets received a passing grade despite the largest leveraged liquidation event in history. According to Cointelegraph, Hougan described the sharp weekend decline as a blip rather than a major concern. The crash occurred after President Donald Trump threatened 100% tariffs on Chinese imports on October 10, 2025. Bitcoin dropped nearly 15% while Solana fell 40%. Approximately 20 billion dollars in leveraged positions were liquidated across exchanges.
CNN Business reported that Bitcoin fell from roughly 122,500 dollars to a low of 104,600 dollars on Friday afternoon. Ethereum declined approximately 21% during the same period. The market experienced forced closures of highly leveraged positions as exchanges automatically closed trades when losses threatened to exceed investors' ability to repay. By Monday, Bitcoin rebounded to around 115,000 dollars, nearly erasing weekend losses.
Hougan noted in his Tuesday blog post that many DeFi platforms performed without failures. Uniswap, Hyperliquid, and Aave reported no losses during the turbulence. Some exchanges including Binance faced technical issues with certain platform modules. Hougan said crypto markets performed as well or better than traditional markets would have in similar circumstances.
Market Infrastructure Demonstrates Strength Under Pressure
The rapid recovery demonstrated the resilience of blockchain infrastructure according to Hougan's assessment. Damage remained contained to individual investors rather than spreading to major institutions. No significant institutional collapses occurred during the event.
Data from Cointelegraph showed open interest in perpetual futures plummeted from 26 billion dollars to under 14 billion dollars. Decentralized exchange trading volume surged past 177 billion dollars. Crypto lending fees reached an all-time high of 20 million dollars during the chaos.
CryptoQuant analysts said data suggested an orderly market reset rather than a panic-driven collapse. Of the 14 billion dollars wiped from open interest, roughly 93% represented controlled deleveraging. Only 1 billion dollars in Bitcoin long positions were liquidated forcefully.
Broader Implications for Crypto Market Structure
Hougan attributed the sell-off primarily to highly leveraged traders rather than fundamental shifts. Nothing fundamental to crypto's outlook had changed including underlying technology, security, or regulatory environment. He expects markets to refocus on fundamentals once volatility subsides.
However, some observers blamed liquidity withdrawal by market makers for deepening the crash. Blockchain investigator YQ said liquidity began disappearing from order books approximately one hour after Trump's tariff threat. Market depth fell 98% before prices bottomed out, creating what analysts called a liquidity vacuum.
The flash crash sent traditional markets into decline as well. The S&P 500 posted its worst day since April 2025. Risk assets broadly tumbled as investors fled to perceived safety of Treasury bonds and gold. According to CNN Business, silver futures soared 7% on Monday and hit an all-time high.
Analysts remain divided over whether the liquidation event represented a coordinated sell-off by market makers or a natural deleveraging cascade. The debate reflects ongoing questions about market structure and manipulation risks in 24/7 crypto markets. Some participants accused major market makers of orchestrating the downturn, though proving such coordination remains difficult.
Hougan concluded that over time, markets will catch their breath and renew attention on crypto fundamentals. He believes the bull market will continue once stability returns. The weekend's test revealed both strengths and vulnerabilities in crypto infrastructure as the industry matures.