Adam Cochran pointed to how there were a lot of crypto gurus who were promoting long dead coins for massive pumps.  He clarified stating, I’m talking about coins that I’m not sure even have development teams anymore. Meanwhile, many of them were hedging into cash positions.

For clarity, Adam Cochran is known for his long insightful threads about the cryptocurrency market.  Those who are interested might want to follow him to understand intricate nuances in the market.

He further stated how such a trend can lead to dicey futures market. He said it was worse on the retail heavy exchange like Binance, as the order book got pretty tightly packed around the price, and thin when it comes to backstops.

He pointed to how a dip like this is a small dip, which exaggerated by either an engine or operations failure.

He further stated, it was Binance that led the market in the dip, and specifically Binance futures. We know this because the futures market is what tanked the hardest, fastest and furthest.

In fact on Binance, the drop was so bad that you were able to pick up long-term futures at prices well below the spot market. While spot dipped to $51k, futures were trading in the low $40ks. That tells me that something was failing in terms of arbitrage or backstop, but that it started in the futures market and everything else was being dragged down with it.

I think what we saw was a cascade of tightly wound retail positions on a weekend market, get toppled, but somewhere along the line, there was a matching book fail that caused stop-losses to not get hit and when that happened it put a massive $63M position in jeopardy.

That $63M position getting liquidated is what put the market in major jeopardy, but by that time there was already degraded performance issues connecting to Binance and spiking gas fees. So there was very little way for anyone to backstop or arbitrage that liquidation.

There were all sorts of arbitrage opportunities, weird flash sales, and mismatched options/futures last night, which big trade firms work really hard to capitalize on the opportunity between. So when you see those appear it usually means access issues.

Whenever the crypto market is high, people out there publish and cycle through various FUD messages trying to drop the market so they can gain on shorts. These happen dozens of times a day, but usually they go unnoticed.

Once we have a major market drop, we tend to go looking for a single obvious spark that caused the issue externally and can over correct to weak evidence just because it is an easy narrative.

What you had here is typical weekend behavior, magnified by over leveraged new retail and a technical stress test failing leading to a perfect storm. No evil boogieman banning or criminalizing crypto, etc.