Bitwise Manager Calls $20B Wipeout the Largest Crypto Liquidation Ever, Here’s What Triggered It

Over $20 billion was liquidated in hours, marking the largest crypto wipeout on record.

Centralized exchanges faced liquidity breakdowns, while DeFi platforms like Aave and Morpho stayed stable.

Leverage levels reset after massive liquidations, leaving the crypto market in a healthier position.

The crypto market faced unprecedented turmoil on Friday as more than $20 billion vanished in the largest liquidation event on record. Bitwise portfolio manager Jonathan Man attributed the collapse to vanishing liquidity and forced deleveraging, which drove sharp losses and temporary crashes across several digital assets.

Bitwise Manager Describes Record Crypto Liquidation Event

Bitwise portfolio manager Jonathan Man described Friday’s market crash as the most severe liquidation event in the history of cryptocurrency trading. He reported that more than $20 billion in value disappeared within hours as exchanges liquidated overleveraged positions amid vanishing liquidity.

Bitcoin plunged nearly 13% in one hour, while smaller altcoins suffered heavier losses. Man said Cosmos’s ATOM dropped “to virtually zero” on some trading platforms before quickly rebounding. He estimated that around $65 billion in open interest was wiped out, returning market exposure to mid-summer levels.

Man explained that perpetual futures, or perps, operate through shared margin systems. When traders lose more than their collateral and markets lose liquidity, exchanges must rebalance by triggering forced closures, a process known as auto-deleveraging. This ensures solvency but can also close profitable trades to maintain market balance.

Liquidity Breakdown and DeFi’s Relative Stability

According to Man, centralized exchanges faced the most pressure as liquidity providers pulled back or widened spreads to reduce exposure. This retreat left order books shallow, leading to cascading sell-offs across smaller tokens that rely heavily on active market makers.

DeFi platforms, however, showed greater resilience. Man attributed this stability to lending protocols like Aave and Morpho, which primarily accept Bitcoin and Ethereum as collateral. He also noted that the USDe stablecoin’s $1 peg was maintained within DeFi, preventing broader liquidation loops.

Man added that Hyperliquid’s HLP vault performed strongly during the sell-off, absorbing distressed trades and stabilizing liquidity. He said that despite the severe volatility, leverage levels have reset, leaving the market in a healthier position heading into the new trading week.

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