$19B Wiped Out in Crypto's Biggest Liquidation

How big was the crash?

• Some argue it was “business as usual” for Bitcoin: price briefly flash‑crashed (~$104k) but mostly returned to levels seen two weeks earlier.
• Others stress that, in dollar terms, this was crypto’s largest liquidation event ever, especially because it happened extremely fast and triggered mass forced liquidations rather than voluntary selling.
• Much of the carnage was in altcoins, with many dropping 60–80% (or more, briefly) in minutes before partially rebounding.

Leverage, liquidations, and exchange mechanics

• Commenters highlight extreme leverage (100–1000x) and lack of risk management as primary causes of the liquidation cascade.
• Auto‑deleveraging systems on exchanges closed positions en masse once markets moved, particularly in thinly traded coins with absent market makers.
• A linked analysis claims attackers exploited a collateral/oracle loophole on Binance’s “Unified Account” system to crash certain collateral assets and trigger liquidations.

Tether’s role and backing debate

• One view: Tether “printed” around $1B USDT during the drop, providing crucial liquidity and cushioning the fall; Tether is described as a de facto central bank for Bitcoin.
• Supporters say Tether is now likely fully backed, hugely profitable via Treasury yields and other investments, and has strong incentives not to commit fraud.
• Skeptics question whether all reserves are real or risk‑free, note historical under‑backing findings, the absence of a full Big‑4 audit, opaque investments, and hard redemptions.
• There’s disagreement over whether new US stablecoin regulations (e.g., GENIUS Act) meaningfully address concerns, especially since Tether is not currently US‑regulated.

Insider trading and manipulation concerns

• Multiple comments allege large, precisely timed short positions were opened shortly before the President’s tariff announcement, yielding hundreds of millions in profit.
• Some argue insider trading in Bitcoin is illegal under CFTC rules but practically unenforced, especially for politically connected actors.
• Others point to additional alleged manipulation vectors: price oracles, exchange behavior, and concentrated liquidity providers.

Bitcoin, macro factors, and value debates

• Many see Bitcoin trading as a high‑beta risk asset, correlated with equities and macro shocks (tariffs, central bank moves).
• Long‑term holders frame this as a normal, temporary drawdown in a volatile but deflation‑resistant asset.
• There is extended debate over Bitcoin vs gold, “intrinsic value,” whether Bitcoin is money or a speculative security, and whether it could ever realistically go to zero.