Sharp Declines Across Altcoins
Early this morning, major altcoin markets on Binance saw extreme crashes, with some tokens plummeting over 80%–90%, according to Binance’s own commentary. Several smaller-cap altcoins reportedly “fell to zero” in flash moves.
One specific example mentioned in commentary is IoTeX (IOTX), which briefly dropped dramatically, though details of its bottom price vary in third-party reports.
Overall, Coinglass and media sources estimated that in the past 24 hours, more than USD 19.1 billion in liquidations occurred across the crypto markets, with over 1.6 million positions liquidated. The largest individual liquidation was reportedly an ETH-USDT long position worth ~USD 203 million on Hyperliquid.
Binance itself acknowledged that “many altcoins plummeted over 80% or even 90%” due to cascading liquidations.
Hayes’ Explanation: CEX Auto-Liquidations and Cross-Margin Triggers
Arthur Hayes, co-founder of BitMEX, offered a possible explanation for the severity of the crash, citing market rumors that major centralized exchanges (CEXs) may have automatically liquidated collateral tied to cross-margin positions. This, he argues, could have triggered cascading declines in many altcoins. While no public proof is known, the hypothesis aligns with how derivatives platforms manage risk in volatile market conditions.
Hayes added that many altcoins that reached such low levels will likely not revisit those prices anytime soon, especially those perceived8 as higher quality, due to capital flight, lost confidence, or depleted liquidity.
Market & Technical Dynamics at Play
- Cascade liquidations: In volatile markets, auto margin calls and forced liquidations often snowball: one token’s fall triggers more liquidations in correlated assets.
- Liquidity glut & thin markets: Smaller altcoins have less resilience; when large sell orders hit, there may be few counterparties to absorb the motion, exacerbating price drops.
- Margin structure risks: Cross-margin positions share collateral across assets; if one asset breaks, it can drag others down.
- Whale / institutional moves: In extreme cases, large holders might exit quickly, either triggered by margin or risk control, intensifying the drop.
The magnitude of the move suggests systemic stress rather than isolated failures, and the pairing of wild price swings with large liquidations supports this.
Implications & Key Risks
- Recovery hurdles: Once such deep drawdowns occur, investors may stay away due to fear, and some projects may lose viability or liquidity.
- Confidence damage: Flash crashes of this scale can erode trust in crypto markets, especially among retail participants.
- Exchange & risk policy scrutiny: Exchanges’ liquidation algorithms, margin rules, and collateral structures may come under scrutiny for contributing to market instability.
- Differentiation of altcoins: Surviving altcoins with strong fundamentals, liquidity, and community will likely recover more easily than speculative small-cap tokens.
- Regulatory attention: Such episodes can invite regulatory intervention around margin trading, derivatives safety nets, and investor protections.
What to Watch Next
- Price floors & stabilization — whether any altcoins find support or bounce quickly
- Exchange statements & postmortems — Binance, other CEXs may publish explanations or risk-control summaries
- Margin / liquidation data — more precise data on which positions were liquidated, and collateral cross-asset impact
- On-chain flows & large wallet behavior — to see where capital is moving in reaction
- Project survivability — tokens that survive this crash may emerge stronger or more consolidated
Bottom Line
Today’s extreme altcoin declines—some over 90%—represent one of the most severe market3 crashes in recent memory, driven in part by cascading liquidations and perhaps aggressive auto-margin enforcement on centralized exchanges. Arthur Hayes’ theory of forced cross-margin liquidations offers a plausible lens through which to view this event. Whether the hardest hit tokens ever recover to prior levels remains uncertain; the episode underscores the fragility of leveraged crypto markets and the importance of liquidity, risk management, and structural safeguards.
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