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- Zafar Naik
Zafar Naik
- Reviewed by:
Qadir AKQadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
- Nov 05, 2025 10:13 UTC
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Crypto Market Cap Drops $1.2 Trillion in Eight Weeks – Was This Reset Needed?
Over $1.2 trillion was wiped from crypto markets in eight weeks as extreme leverage unraveled.
Analyst Shanaka Anslem Perera calls it a calculated execution, not a crash.
Despite the wipeout, crypto adoption, institutional interest, and regulation hit new highs.
“Crypto didn’t crash. It was executed.”
That one line from analyst and author Shanaka Perera has everyone on X buzzing and recapping what happened in one of crypto’s most dramatic months. Over just eight weeks, the global crypto market cap fell from $4.6 trillion to $3.4 trillion, erasing nearly $1.2 trillion in value.
Was this just another crypto winter? Signs say no. It was a massive deleveraging event, a technical wipeout where too much leverage collided with too little liquidity.
The Day the Leverage Broke
On October 10, over $19 billion worth of leveraged positions were liquidated in just 24 hours, according to CoinGlass data. In the days around it, nearly 487,000 traders were wiped out daily.
The problem started when open interest, the total value of all futures contracts, hit a record $217 billion, while spot liquidity dropped to just 5% of normal levels. That imbalance created a feedback loop. As prices dipped, margin calls kicked in, triggering forced selling, which drove prices even lower.
By the end of the month, open interest had collapsed 43% to around $123 billion, marking one of the fastest market resets in years.
Perera described it as “The machine ate itself.”
Sounds like it’s all bad. But the fundamentals are telling a very different story.
Meanwhile, Crypto Adoption Hit Record Highs
While prices fell, crypto adoption and on-chain activity hit all-time highs.
Independent data shows the number of global crypto users have jumped to around 560 million, up by 40 million in just six months. Stablecoins now power nearly 30% of all crypto transactions, triple their share from 2022.
Institutional players doubled down too. BlackRock and MicroStrategy collectively hold over 1 million Bitcoin, and major fund houses like Fidelity and Franklin Templeton have rolled out regulated crypto products.
In the U.S., the GENIUS Act was put into effect, and the CLARITY Act gave stablecoins a clear legal framework. In short – while traders were forced out, the builders and institutions kept moving in.
Why This Isn’t 2022 All Over Again
Back in 2022, both prices and adoption collapsed. Exchanges failed, regulation was unclear, and trust evaporated.
This time is different. The system reset itself rather than collapsing. DeFi lending volumes have grown to $39 billion, real-world asset tokenization crossed $8 billion, and blockchain infrastructure has become faster and cheaper.
What Comes Next
If history repeats, the next phase could be powerful. Perera points out that every major reset in crypto, from 2017 to 2021, was followed by new highs once leverage cleared out.
The indicators to watch now: open interest falling below $30B, ETF inflows topping $5B a week, and stablecoin supply growing 20% monthly. When those align, markets usually turn.
“Leverage massacred speculators. Fundamentals rewarded builders.”
The markets seem to have cut off the noise. Once it settles, the same mechanics that broke the market could be the ones to push it higher again.
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FAQs
The crash was triggered by extreme leverage and low liquidity, leading to mass liquidations and a fast market reset—not a collapse.
No. This was a technical deleveraging event, not a long-term downturn. Adoption, regulation, and institutional interest remain strong.
In 2022, trust collapsed. This time, the system self-corrected. Infrastructure, regulation, and adoption actually strengthened.
Watch for open interest below $30B, ETF inflows above $5B weekly, and rising stablecoin supply—these often precede market rebounds.
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