Underlying Causes Behind the Market Turmoil
Recent market volatility has been wrongly attributed to a specific platform's yield program. However, this analysis overlooks critical market dynamics.
Key Observations
- Bitcoin prices had already declined before the alleged trigger asset showed any significant movement, invalidating the causality.
- The price anomaly was limited to one exchange, making it insufficient to explain the global liquidation wave.
Real Catalysts of the Crash
The primary drivers behind the market collapse included:
- Market panic triggered by new tariff policy developments under Trump.
- Temporary API outages on a major exchange, preventing market makers from balancing positions across platforms.
- Activation of the Auto-Deleveraging (ADL) mechanism, which amplified losses by breaking hedging positions.
- The lack of circuit breakers or stabilizing mechanisms commonly found in traditional finance, leaving retail investors exposed.
Implications of Structural Weaknesses
This event reflects the cumulative impact of systemic flaws and interdependent risks in the crypto market. While long-term recovery remains possible, short-term damage to traders and liquidity providers has been severe.