Last Friday's overnight liquidation wave that erased nearly $19 billion in crypto derivatives positions across major exchanges has finally made it to Ripple’s Chief Technology Officer David Schwartz.
Addressing a question about whether market makers were behind the violent sell-off that pulled Bitcoin down to $102,000 and sent altcoins into double-digit losses, Schwartz admitted he had not studied the triggers or mechanics but made it clear that the ripple effect spoke for itself.
The consequences have been brutal indeed. Open interest on the derivatives market collapsed by more than $6 billion within hours, funding rates reset across all major pairs and liquidations clustered on overleveraged long positions.
Data from CoinGlass shows Bitcoin alone accounting for roughly $2.1 billion in wiped-out positions, while Ethereum added nearly $800 million to the total as its failed breakout attempt above $4,000 turned into a rapid reversal.
For XRP, closely tied to Schwartz through Ripple, the plunge below $2 erased almost 15% of its market capitalization before a partial recovery toward $2.50 as the nearing XRP ETF decisions continued to affect sentiment.
Potential reasons
In the meantime, market participants continue to figure out the real reasons for the so-called "Black Friday." Some tie it to the Binance vs. Hyperliquid tension, with the former publicly admitting that the flash crash was boosted by the depegging of such margin collaterals as USDe, BNSOL and WBETH.
At the same time, the reasons lie in the potential insider play within the U.S. government and mysterious whale who perfectly played out the flush with a $600 million short on Bitcoin.
By choosing to stress outcomes over speculation about culprits, Schwartz placed attention squarely on the damage inflicted on market participants.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team