Shaw, Golden Finance. The cryptocurrency market experienced another extreme early morning decline, with a brief period of significant losses. Bitcoin briefly fell below $110,000, while Ethereum plummeted by over 17%. Various altcoins also experienced varying degrees of decline. In the past 24 hours, nearly $20 billion in margin calls were liquidated across the network, with over 1.65 million individuals experiencing margin calls. Meanwhile, major global markets also saw significant early morning declines, with all three major US stock markets hitting one-month lows. The benchmark 10-year US Treasury yield fell below 4.04% after the US market closed. The ICE Dollar Index (DXY) fell over 0.7% on the day. Crude oil closed at a five-month low, posting its largest daily drop in over three months. Bucking the trend, the gold market rose, with New York gold futures rising nearly 1.7% and spot gold rising nearly 1.2%. What are the reasons behind the recent decline in cryptocurrencies and other major global markets? Does the market still have momentum to rebound? When will it rebound? Let's take a brief look. 1. Crypto Markets Plunged Extremely Early in the Morning, with Major Global Markets Falling Significantly This morning, the cryptocurrency market experienced another extreme decline, with a brief period of significant price drops. Between 04:50 and 05:20, Bitcoin plummeted as much as 12.7% in 30 minutes, briefly hitting a low of $102,000. Ethereum plummeted as much as 14.3% in 30 minutes, briefly falling to a low of $3,435.00. Bitcoin and Ethereum subsequently rebounded slightly. Bitcoin has now risen above $112,000, narrowing its losses to around 7.8%. Ethereum has risen above $3,800, narrowing its losses to around 12%. Affected by the broader market, the altcoin market also experienced extreme declines, with XRP and Dogecoin plummeting by over 30% at one point. BCH's 24-hour drop reached 11.38%, LINK over 21%, AAVE over 22%, ADA over 24%, SUI over 26%, and DYDX over 45%. CoinGecko data shows that the total cryptocurrency market capitalization has fallen to $3.84 trillion, a 24-hour drop of 9.35%. Currently, BTC holds a 58.45% market share, while ETH holds a 13.46% market share. Coinglass data shows that over the past 24 hours, the total amount of liquidated positions across the entire network has risen to $19.279 billion, setting a new record. A total of 1,657,646 individuals worldwide have experienced liquidations, of which $16.794 billion were liquidated on long positions and $2.485 billion on short positions. The largest single liquidation occurred on the Hyperliquid platform's ETH-USDT contract pair, valued at $203 million. In terms of cryptocurrencies, Bitcoin saw a $5.353 billion liquidation, Ethereum saw a $4.412 billion liquidation, SOL saw a $2.004 billion liquidation, HYPE saw a $890 million liquidation, and XRP saw a $707 million liquidation. At the close of Friday, the main CME Bitcoin futures contract fell 5.94% from Thursday's closing price to below $116,000. It began a downward trend at 10:57 PM Beijing time on Friday, with a cumulative decline of 7.37% this week. The main CME Ethereum futures contract, DCR, plummeted 11.29% to $3,879 on Friday, bringing its weekly decline to 14.80%. It briefly dipped to $3,500 after the US market closed on Friday, continuing its downward trend from Tuesday to Friday. Other major global markets also saw significant declines in the early morning hours. All three major US stock markets hit new one-month lows, with the S&P and Nasdaq Composite experiencing their largest daily declines in six months, erasing the gains of the previous four days and returning to negative territory for the week. The Dow Jones Industrial Average saw its first five-day losing streak in two months. The benchmark 10-year US Treasury yield fell below 4.04% after the US market closed, surpassing the low set last Friday since September 18. The ICE US Dollar Index (DXY) continued its decline throughout Friday, falling over 0.7%. Crude oil closed at a five-month low, posting its largest daily drop in over three months. Meanwhile, the gold market bucked the trend, rising. New York gold futures rose to $4,038.6, a nearly 1.7% daily gain, and spot gold rose to $4,022.92, a nearly 1.2% daily gain. II. What factors are driving the market flash crash? 1. The Sino-US trade dispute has reignited, heightening market concerns. The Ministry of Commerce announced Thursday that it will add five new rare earth elements to its control list (after adding seven in April) and expand restrictions on their use in refining technology and overseas military and semiconductor applications. Foreign companies using Chinese rare earth materials will need export licenses. This measure, intended to enhance national security, is also seen as leverage in trade negotiations. Most of the restrictions will take effect on December 1st. Subsequently, Trump announced an additional 100% tariff on Chinese goods exported to the United States, effective November 1st, and the implementation of export controls on critical software in response to China's tightening restrictions on rare earth exports. Global concerns about the escalating Sino-US trade dispute understandably triggered a market crash, largely contributing to the early morning flash crash in the cryptocurrency market. 2. A surge in exchange traffic caused outages, accelerating investor exodus. Early this morning, Coinbase officially announced that they were aware that some users may experience delays or performance degradation when trading, but their funds are safe. The team is investigating the cause and will provide an update as soon as possible. Binance officially announced that due to unusually high market activity, the system is currently under heavy load, and some users may experience intermittent delays or display issues. The platform is actively monitoring and handling the relevant situation, emphasizing the security of user funds. Subsequently, Binance updated that all services have returned to normal and are gradually recovering. Officials will continue to closely monitor developments to ensure that all operations proceed smoothly.
In addition, Kraken officials also issued a statement saying that they are investigating customer feedback on difficulties connecting to the website, API, and accessing through mobile applications. The problem seems to be related to excessive traffic.
When the crypto market plunged in the early morning, a large number of transactions poured into the exchange, and the traffic surged, causing short-term access jams and failures on the exchange, which also accelerated the escape of investors. 3. Stablecoins such as USDe experienced decoupling, triggering investor panic. Early this morning, the stablecoin USDe experienced a significant decoupling, briefly plummeting to as low as $0.6567 and experiencing a 24-hour drop of over 34%. Ethena Labs stated that USDe's secondary market price experienced brief fluctuations due to significant market volatility and large-scale liquidations. However, its minting and redemption functions remained operational throughout the process, and USDe remained overcollateralized. Ethena will continue to provide relevant information. Ethena Labs subsequently issued a statement clarifying that no automatic deleveraging (ADL) had occurred in any of its positions. USDe does not hold any short positions on DEXs. In addition, Binance's WBTC, WBETH, and WBSOL prices plummeted in the early morning hours, depegging. WBTC briefly plummeted to $35,000, while ATOM plummeted to $0.001. Binance subsequently issued a statement stating, "The price depegging of USDe, BNSOL, and WBETH triggered forced liquidations for users. The team is currently conducting a comprehensive investigation into the circumstances of affected users, the details of this forced liquidation, and developing an appropriate compensation plan. Binance is also strengthening risk management controls to mitigate the risk of similar incidents in the future." The depegging of the stablecoin USDe and several other cryptocurrencies on exchanges, resulting in forced liquidations for users, triggered investor panic. The massive sell-off of assets further fueled the market's short-term plunge. 4. Whale accounts were active during the cryptocurrency decline, exacerbating market volatility. Whale accounts were unusually active during the cryptocurrency market's early morning decline. According to on-chain data analyst Ember, a certain contract whale address closed its short position at the bottom of the market's plunge early this morning. The BTC position closed at $106,216 and the ETH position at $3,433, resulting in a total profit of $21.82 million. Reportedly, after liquidating its ETH position at $4,221 on September 22nd for a profit of $11.6 million, the address shorted $137 million worth of BTC and ETH on Hyperliquid, opening short positions at $120,892 and $4,502, respectively. On-chain analyst Aunt Ai (@ai_9684xtpa) monitored that an ancient BTC whale, who had been actively swapping out ETH, opened a $1.1 billion short position 17 hours ago, including a 10x short on BTC and a 12x short on ETH, and has currently profited $78.56 million. Lookonchain monitored that a Bitcoin OG has closed most of his short positions in Bitcoin and Ethereum, leaving only 821.6 BTC (worth $92 million) short, representing a profit of over $160 million. On-chain analyst Aunt Ai (@ai_9684xtpa) also observed that the whale's long ETH position was forcibly liquidated this morning, resulting in a cumulative loss of $12.16 million, and a total loss of $29.92 million in a month, with the majority of losses coming from XPL and ETH. The unusually active behavior of whale accounts and the large number of long and short contract transactions exacerbated short-term market volatility during the cryptocurrency market's decline, potentially contributing to the flash crash. III. Does the market still have momentum for a rebound? When will this rebound occur? Will the crypto market still have momentum after the plunge? When will this rebound occur and offset the losses? Will the final quarter of this year see the same trend as previously predicted? What other market analyses and opinions are there? 1. Bitwsie's Chief Investment Officer stated that various favorable factors have converged, and record inflows into Bitcoin ETFs will be strong enough to push BTC prices to new all-time highs in Q4. There are three reasons: 1. The crypto industry has won over large wealth management platforms. Wealth management platforms that control huge assets, such as Morgan Stanley and Wells Fargo, allow advisors to make crypto allocations on behalf of clients; 2. "Depreciation trades" are hot trades on Wall Street this year, and the government is indeed devaluing its currency; 3. There is optimism about Bitcoin returns in Q4, and higher prices will stimulate greater demand for Bitcoin ETFs. 2. Binance founder Changpeng Zhao (CZ) stated in a podcast interview, "Being exposed to Bitcoin early on was a gift from the times. Blockchain and Bitcoin are technologies that will change the future. After understanding blockchain technology, I determined that the crypto industry and Bitcoin were the future. Bitcoin was the leader, and nothing could challenge it at the time. Even today, I don't think any other token can come close or challenge it." 3. Strategy founder Michael Saylor stated in a post on the X platform, "There are no tariffs on Bitcoin." 4. Arctic Digital analyst Justin d'Anethan stated that Bitcoin's pullback after reaching a new high was more of a temporary pause than a trend reversal. Short-term holders took profits, and some leveraged long positions were liquidated, but long-term holdings remained unchanged. The current market is impacted by macroeconomic uncertainties, with the US government still in a partial shutdown. This situation will provide positive support for safe-haven assets such as gold and Bitcoin. A Deutsche Bank report indicates that with growing interest from institutional investors and the weakening dominance of the US dollar, Bitcoin and gold are expected to become significant components of central bank reserves globally by 2030. The report suggests that central banks' allocations to Bitcoin may reflect a new, modern "foundation of financial security," comparable to the role played by gold in the 20th century. The report argues that uncertainty stemming from US tariff policies and geopolitical risks are prompting investors to seek inflation hedges and prepare for a future in which the role of traditional fiat currencies may diminish. State Street predicts that most institutions will double their Bitcoin and cryptocurrency holdings by 2028. 7. ABCDE co-founder Du Jun stated in a post that the launch of staking functionality for US Ethereum spot ETFs is a significant boon for Ethereum. With reduced supply and increased demand, ETH staking enhances the ETF's "revenue attributes," similar to stock dividends, attracting more institutional and retail investors. Competitors like BlackRock are expected to follow suit, and it's estimated that new inflows into various Ethereum ETFs will exceed $10 billion within the next year.
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