In markets
Crypto just experienced one of the craziest weekends in its history, with cascading liquidations of leveraged positions worth A$29.3 billion (US$19.13 billion), according to CoinGlass. That’s an order of magnitude larger than the A$2.45B/US$1.6B in liquidations seen during the FTX collapse in 2022. Bitcoin plunged by around A$16k (US$10.4k) in a few hours (more on some venues) and Ethereum briefly dropped A$1,200 (US$780), but both were the standout safe performers in crypto, thanks to ample liquidity and dip buyers. Altcoins with thin liquidity lost 40%-80% and some, like ATOM, appeared to plunge by 99.5% briefly (although this may have been a display issue). Some market makers, who typically prop up trading, reportedly pulled out during the flash crash, exacerbating the problems. Traditional markets plunged too, after President Donald Trump responded to China’s rare earth export controls by threatening to resume the trade war with 100% tariffs – a threat he later appeared to walk back. Many perp traders were unhappy to discover that Auto Deleveraging can close out their positions without warning. Bitcoin finishes the week down 7.6% to trade around A$177,004 (US$115,252) while Ethereum was down 9.4% to trade around A$6,520 (US$4,245). Many other altcoins remain down by double digits, but the situation is improving, and the Crypto Fear and Greed Index has recovered from a low of 24 (Extreme Fear) on the weekend to 38 (Fear) now.
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In Headlines
What just happened?
The Kobeissi Letter argues the crypto sell-off actually began an hour before Trump’s post. While a forensic investigation is yet to be completed, there has been much discussion/speculation around oracles on Binance that reference local spot prices rather than the wider market, playing a role. The USDe stablecoin lost the peg on Binance and plunged to 68c, but Ethena said USDe had just minor wobbles elsewhere. Users were then reportedly liquidated from positions collateralised in USDe, BNSOL, and WBETH, which triggered more liquidations and forced sales, including on interconnected venues. Some analysts argue that the whole flash crash was actually an orchestrated Oracle attack. Binance stated that its systems were functioning properly and attributed any issues to macro-driven volatility, thin liquidity, long-dormant limit orders from 2019, and display glitches. However, it paid out US$283 million (A$434M) in compensation to users and has since updated its oracles to source price fees from external sources.
ETH vs SOL
Ethereum and Solana maxis have been battling it out online with claims and counterclaims about which network fared better during the flash crash. Both networks stayed online and processed transactions. The Ethereum ecosystem reached a combined new peak of 2,835 TPS, although the mainnet itself topped out at just 26 TPS. Solana fans touted that the system had “ingested” 100,000 TPS during the peak of the flash crash, but the actual TPS measured was closer to around 2,500 TPS, and many of those transactions failed to land. Fees remained very low on Solana, peaking at US$0.25 (A$0.38). While there were reports of US$100 (A$154) fees on the Ethereum mainnet, the average, according to Ycharts, was US$2.621 (A$4.02).
Bitmine buys the dip, Strategy buys the peak
Tom Lee’s Bitmine took the opportunity to buy the dip, with the company announcing it now owns greater than 2.5% of the entire Ethereum supply with just over 3 million ETH. That’s halfway to its goal of amassing 5%. “The crypto liquidation over the past few days created a price decline in ETH, which BitMine took advantage of. We acquired 202,037 ETH tokens over the past few days,” said Lee. Michael Saylor’s Strategy, by contrast, bought 220 Bitcoin just before the dip and missed out on the fire sale prices. Rich Dad Poor Dad author Robert Kiyosaki has been advising people to invest in hard assets, such as Bitcoin, for a while now, due to a crash he believes is imminent this year. He’s now saying that silver and Ethereum are the assets to buy because “they are stores of value, but more importantly, used in industry and prices are low.”
Crypto market structure bill looks further away than ever
Democrats on the Senate Banking Committee have sent a counterproposal for a crypto market structure bill to Republicans. Critics say the Democrat proposals would “kill DeFi” by stripping protections from crypto devs and imposing KYC rules on the frontends of crypto dApps, including non-custodial wallets. The proposals would also enable Treasury to create a “restricted list” of DeFi protocols it deems too risky. Lawyer Jake Chervinsky warned that the counterproposal could kill any chance of agreement on the crypto market structure bill. “It’s so bad. It doesn’t regulate crypto, it bans crypto,” Chervinsky said.
Global banks may issue G7 stablecoins
Ten global banks, including Goldman Sachs, Deutsche Bank, and Citigroup, are teaming up to develop blockchain-based digital assets based on G7 currencies. The early-stage project is exploring whether there is value for the banks to issue stablecoins pegged 1:1 with real-world currencies.
Sovereign wealth fund buys Bitcoin
Luxembourg’s sovereign wealth fund has become the first European nation to invest US$9 million (approximately A$13.8 million) or around 1% of its entire portfolio into Bitcoin exchange-traded funds (ETFs). It said that buying Bitcoin via ETFs rather than directly helped ensure compliance with EU financial frameworks. Luxembourg is only 2586 square kilometres in size and has 650,000 residents.
Singapore delays new crypto rules
The Monetary Authority of Singapore has deferred new crypto prudential standards by one year to the start of 2027. MAS said it had delayed the rules following concerns raised by the industry that the risk classifications would unfairly penalise assets on permissionless blockchains by forcing banks to hold capital buffers of up to 1,250% for the assets deemed riskiest.
South Korea’s taxman is coming for cold wallets
South Korea’s National Tax Service (NTS) has warned that it will raid homes and seize cold wallets belonging to cryptocurrency enthusiasts who fail to pay their taxes. “We analyse tax delinquents’ coin transaction history through crypto-tracking programs, and if there is suspicion of offline concealment, we will conduct home searches and seizures,” the NTS spokesperson told local media Hankook Ilbo.
Hong Kong’s HashKey Group IPO
HashKey Group, the operator of Hong Kong’s top licensed exchange, has filed to list on the local stock exchange and hopes to raise up to US$500 million (A$768M). In September, Hashkey launched a $500 million crypto treasury fund, and local regulators have approved the company to offer staking services, with the aim of providing staking for Ether ETFs.
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Until next week, happy trading!
