The most significant crypto market crash occurred over the weekend, leaving its mark even now. Bitcoin, Ethereum, and virtually all major digital assets faced severe price declines, initiated by a panic triggered by former US President Donald Trump’s unexpected announcement of a 100% tariff on Chinese tech exports, which quickly escalated into over $19 billion erased from the crypto market.
In the wake of this, analysts and commentators started to reconstruct the events that unfolded. Many now assert that the crash was not an organic occurrence but rather a carefully orchestrated event.
The Crash Was Too Coordinated To Be Accidental
Crypto commentator Ran Neuner was among the first to contend that the weekend’s downturn seemed overly manipulated to be coincidental. In a post on the social media platform X, Neuner highlighted that the sell-off initiated right after US markets closed late Friday, during a time when both European and Asian trading desks were inactive.
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Concurrently, several major oracles began displaying inconsistent price data, liquidity across exchanges diminished, and numerous users reported being unable to access trading platforms to buy the dip or close their positions.
Additionally, crypto data platforms such as CoinGecko were either down or showing inaccurate information, leaving users in the dark regarding the crash. Neuner assessed that this was not merely a collection of isolated issues but rather a chain reaction of failures occurring simultaneously throughout the ecosystem. It appeared as though some actors had tactically executed the right moves at precisely the right moments, labeling the crash as a “highly coordinated and expertly orchestrated attack.”
Was Binance’s Collateral System Manipulated?
Another theory gaining traction came from a commentator known as ElonTrades, who suggested that the crash was the result of an exploitation of a flaw within Binance’s internal pricing mechanism. His analysis indicates that this event was not spontaneous but rather a calculated attack that turned Binance’s own systems against it, using the shock of Trump’s tariff announcement as an ideal cover.
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According to ElonTrades, Binance’s Unified Account system, which permits traders to leverage multiple assets as collateral for leveraged positions, had been functioning with a significant vulnerability. Rather than depending on external oracle feeds or stable redemption values to assess collateral, the exchange utilized its own order-book prices. This meant that if an individual could manipulate the price of a collateral asset within Binance, they could quickly devalue billions in margin accounts.
Binance had previously announced a transition to oracle-based pricing, but the implementation wasn’t set until October 8. Some traders started offloading between $60 million and $90 million of USDe and other tokens like wBETH and BNSOL on Binance to drive down their internal prices, even though those same assets retained their normal values elsewhere. This artificial price drop caused the platform’s margin system to regard thousands of leveraged accounts as under-collateralized, resulting in automatic liquidations.
This localized depeg triggered between $500 million and $1 billion in forced liquidations. Simultaneously, these actors initiated $1.1 billion in BTC/ETH shorts on Hyperliquid to capitalize on the depeg, ultimately securing $192 million in profit. Just as the forced liquidations commenced, Trump’s 100% tariff announcement captured global headlines, adding to the panic and confusion. Within hours, the liquidation chain expanded to other exchanges.
Regardless of what caused the crash, Bitcoin and other cryptocurrencies are beginning to recover. At the time of writing, Bitcoin is trading at $115,025, reflecting a 2.85% increase over the past 24 hours. Ethereum is valued at $4,160, gaining 8.5% in the last 24 hours.
Featured image from Adobe Stock, chart from Tradingview.com
