Original | Odaily Planet Daily (@OdailyChina)
This morning, BTC briefly dropped over 13%, hitting a low of $102,000, currently reported at $112,000. ETH once plummeted over 17%, while XRP and DOGE fell more than 30%. For more market-related content, see “The Night of the Terrifying Crash: A Record $19.1 Billion Liquidation in a Single Day, Wealth in Frenzy”, “In the Great Crash, Who Made Hundreds of Millions by 'Licking Blood Off the Blade'? What Opportunities for Sudden Wealth Are Within Reach?”, and “The Whale Knife Fight Behind the Largest Liquidation Day in Crypto History: The Bears Feast, Then Leave with Their Knives”.
Although the market generally believes that Trump's tariff remarks have disturbed the sentiment in the crypto market, the recent sharp drop in altcoins far exceeded expectations. What exactly triggered this sudden collective decline in altcoins? Here are various analyses and opinions compiled by Odaily Planet Daily.
Crypto KOL Phyrex: The Crash May Be Due to Trump's Tariff Policy on China
According to crypto KOL Phyrex's post on X platform, today's market collapse is unquestionable and is entirely due to Trump's tariffs on China. The market had already assumed that the relationship between China and the U.S. was not very friendly, but the prolonged tariff timeline still created an ostrich effect. However, Trump's tariff actions on Chinese exports directly tore apart a weak link in the tariffs.
Since February last year, any tariff issues involving China have led to market declines, and this time is no exception. However, I always felt that the U.S.-China relationship would not escalate to a very tense level. The last 125% tariff ended under negotiations between the two countries, so I personally do not believe that the U.S.-China relationship is reversing the market trend. But now the market is indeed somewhat panicked, which is unavoidable. I don't know how long this situation will last, and the panic may not have ended yet.
Arthur Hayes: Automatic Liquidation of Cross-Margin Collateral by Large CEXs Triggered the Altcoin Crash
BitMEX co-founder Arthur Hayes stated that the automatic liquidation of cross-margin collateral by large centralized exchanges (CEX) is the reason for the significant drop in many altcoins during this price decline. He also mentioned that many high-quality altcoins are unlikely to see such levels of price drops in the short term.
Primitive Ventures Founder: The Market Crash May Be Due to Large-Scale Liquidations by a Certain Institution on Binance
Primitive Ventures founder Dovey posted on X platform, speculating that this market crash was caused by a large institution (possibly a trading company using cross-margin) experiencing large-scale liquidations on Binance. Although further analysis is needed, preliminary observations show that the price of USDe on Binance once dropped to $0.6, while prices on other trading platforms remained relatively stable. Additionally, there was a significant difference in trading volume between tokens listed on Binance and those not listed.
Crypto KOL Teacher Bugsbunny: The Morning's Crypto Market Crash Is Due to Issues with Active Market Makers
Crypto KOL Teacher Bugsbunny posted on X platform, stating that market makers have limited funds, and these limited funds will differentiate between various projects, categorizing them into Tier 0, Tier 1, Tier 2, Tier 3, and Tier 4, with different levels of liquidity provided.
Tier 0 and Tier 1 projects receive the most funding, while Tier 2 and Tier 3 projects are only given minimal support. After Jump's collapse, many projects fell into the hands of active market makers, who are essentially very aggressive market makers lacking sufficient hedging awareness. They may not have fully considered tail hedging and only focus on normal market conditions, ignoring extreme scenarios. So at the moment Trump confirmed the reimposition of tariffs, there wasn't enough funding to support all projects. Only the larger projects could be guaranteed. The funds originally allocated to support smaller projects were even redirected to larger Tier 0 and Tier 1 projects. This led to a situation where, when the market faced massive sell-offs, market makers simply did not have enough funds to place orders, resulting in a lack of counterparties and prices plummeting, as seen with IOTX, which nearly went to zero.
Crypto KOL Hanbalongwang: The Market Crash May Be Due to the Combination of USDe Circular Loans, Margin Leverage Doubling, and Trump's Trade War, Resulting in Heavy Losses for Market Makers
Crypto KOL Hanbalongwang posted on X platform, stating that this market crash may be due to the 12% subsidy on USDe, with many market users engaging in USDe circular loans. Under the influence of Trump's trade war, USDe was attacked with a premium, leading to the liquidation of USDe circular loans and further declines in USDe. Additionally, some whales and market makers used USDe as margin for contracts, and due to the de-pegging and discounting of USDe, leverage was inexplicably doubled, ultimately leading to even 1x long positions being liquidated. This triggered a chain reaction, causing the prices of small altcoin contracts to drop rapidly, with USDe plummeting quickly, even doubling its decline, resulting in heavy losses for market makers.
Crypto KOL Big Orange: WBETH, BNSOL, and Other Contract Margins Should Not Reference Spot Trading Pair Prices; The Cascade Drop Could Have Been Avoided
According to crypto KOL Big Orange's post in the community, he previously mentioned the risk control issues with WBETH during a live options session on Binance Square. His main point is: since Binance has allowed WBETH and BNSOL to be used as contract margins, they should not reference the prices of spot trading pairs and could directly fix the exchange rate at 1:1.
The reason is simple—these two assets are essentially internal assets of the Binance ecosystem, which Binance can mint and burn. If issues arise, they can balance the risk simply by going through the redemption period. The "cascade" drop that occurred last night could have been completely avoided.
Crypto KOL Huangdao: The Entire Crypto Market May Have Collapsed Due to a Bug in Binance's Market Making Mechanism
Crypto KOL Huangdao posted on X platform, stating that the culprit behind today's market crash may be a bug in Binance's market-making mechanism. Almost all altcoins on Binance experienced abnormal drops after 5:18 AM, causing prices on other exchanges to follow suit. Comparing SUI on Binance and COINBASE, before 5:17 AM, prices were consistently around $2. After 5:18 AM, COINBASE began to rebound, while Binance started to experience abnormal drops, with a maximum decline of 82%, while COINBASE's maximum decline was only 38%, and there were also unusually large fluctuations in subsequent price spikes.
Moreover, it is noteworthy that the PAXG gold contract also began to experience abnormal drops at 5:18 AM, while the gold contract was in a closed state during this period and should not have fluctuated, indicating that a bug occurred in Binance's market-making mechanism at 5:18 AM, leading to abnormal drops across all varieties.
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