Introduction
On October 11th, Bitcoin plummeted by tens of billions of dollars in just a few hours, and market sentiment quickly shifted from "euphoric" to "post-disaster recovery." This plunge, which Qie Ge called the "cryptocurrency subprime crisis," was more than just a price correction; it served as a mirror, reflecting the structural fragility and liquidity anxiety of the current crypto market.
In a Twitter Space co-hosted by Golden Finance and Twinkle, host Tina and four veteran guests—Qe Ge, DC Greater Than C, Peter and Kiki from the cryptocurrency world—engaged in an in-depth conversation centered around the three themes of "The Plunge, Interest Rate Cuts, and the New Narrative." 1. Behind the Plunge: Is It a Black Swan or a Structural Inevitability? "It's like a mini-subprime mortgage crisis erupting in the cryptocurrency world," Brother Jia stated bluntly in his opening remarks. He believes the core cause of the plunge wasn't a single event, but rather a chain reaction triggered by the depegging of stablecoins like USDe. "The instantaneous unpegging of collateralized lending pairs, particularly USDe, led to a sharp decline in assets, triggering a chain reaction of liquidations of revolving loans and on-chain wealth management products." Professor DC Da Yu C compared the 1011 market crash to historical extreme market fluctuations such as "519" and "312." "These types of black swans occur almost annually and are essentially a natural market liquidation following excessive leverage and overheated sentiment." He further noted that while long-term consensus on Bitcoin continues to strengthen, the market has not yet entered a true easing cycle, and structural risks remain. Kiki analyzed the market from the perspective of market sentiment and leverage structure: "Before the crash, funding rates, leverage, and stablecoin supply were all high, and the market was already in a 'tight' state. The so-called 'Trump tariff rhetoric' or 'whale short selling' was just the straw that broke the camel's back." Peter added that the centralized liquidation of contract positions and the shrinking liquidity of market makers during the crash further amplified the downward pressure on the market. "This is not accidental; it is the inevitable market reaction under extreme structure." 2. The Tragedy of Leverage: Are High-Yield Stablecoins "Efficiency Tools" or "Risk Engines"? During this crash, recursive leverage strategies such as USDe were pushed to the forefront. This type of product is called a "capital efficiency artifact" in a bull market, but becomes a "trigger point for systemic risk" during fluctuations.
Kiki pointed out: "This type of high-yield stablecoin essentially uses the same funds repeatedly in the system to enhance the fund multiplier effect. However, when the market reverses, it will trigger a highly homogeneous stampede, resulting in an instantaneous break in liquidity."
Qia Ge issued a warning from the perspective of compliance and supervision:"This type of recursive leveraged product lacks sufficient legal mechanisms and transparency. Once extreme situations occur, it is easy to trigger a systemic crisis of trust. The market cannot rely solely on high returns to attract funds. It should also pay attention to the security and compliance of the underlying assets."
Teacher Peter believes that recursive leverage is a "double-edged sword":"It does inject liquidity into the market, but it also sows the seeds of risk. In the future, the market needs to find a balance between efficiency and safety."
III. Macro myth: Is interest rate cut an antidote, or another dose of poison? As expectations of a Federal Reserve rate cut in October grow, the market hasn't shown its previous optimism. Will a rate cut truly invigorate the market? Or will it further weaken the already fragile leverage structure? Professor DC Greater Than C analyzed the situation from a macroeconomic perspective: "The market is still in the final stages of a liquidity crunch, and expectations of rate cuts have already been partially priced in. True liquidity easing may not occur until 2026 or even later." He emphasized that even if a rate cut is implemented, the market should be wary of the reversal of the logic that "all good news begets bad news." Brother Qia believes that the transmission of rate cuts to the crypto market will have a lag. "In the short term, funds may still preferentially flow into traditional assets such as US stocks and gold. For the crypto market to truly benefit, more structural confidence needs to be established."
Teacher Peter reminded the community to be wary of "overdrawn expectations": "The market often reacts in advance of interest rate cuts, and may actually experience a pullback after the actual implementation."
Fourth, the next stop narrative: Liquidity Beta or Technical Alpha?
Despite the drastic market adjustments, the guests remained optimistic about the long-term trend of the crypto market and unanimously believed that tracks such as AI, RWA, and decentralized infrastructure will give rise to a new round of Alpha opportunities.
Qia Ge is optimistic about the combination of "AI + encryption" and "on-chain credit system": "AI requires computing power, data and payment systems, and cryptocurrencies have natural advantages in borderless payments and smart contracts. In the future, on-chain identity and credit systems will become new value carriers."
DC is greater than C. Teacher suggested "letting the market tell us the direction": "Judging from recent performance, there has been a significant influx of funds into sectors such as AI tokens, model coins, and platform coins. We must remain sensitive and embrace the trends selected by the market."
Teacher Peter is also optimistic about AI and the Decentralized Physical Infrastructure Network (DePIN): "These sectors have long-term value and can be combined with the real economy. They are important narratives in the next cycle."
V. Conclusion: The plunge is not the end, but a new starting point
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