According to a new report from The Kobeissi Letter, last week’s historic crypto crash, which wiped out more than $20 billion in open positions and sent some altcoins plunging over 90% in a day, was caused by extreme leverage and a sudden macroeconomic shock, not weakening fundamentals.
Analysts described the event as a “perfect storm” that hit a market overloaded with long positions just as liquidity evaporated. More than $16.7 billion in longs were liquidated, compared with $2.5 billion in shorts, a 7-to-1 ratio that magnified the selloff’s speed and depth. The collapse coincided with U.S.
President Donald Trump’s announcement of 100% tariffs on Chinese imports, delivered late on a Friday, a time when crypto markets typically face thin liquidity and sharp volatility.
Even more evidence of the excessive long leverage in the market:
ALL major exchanges except for Bitfinex saw an overwhelming percentage of long liquidations.
Most were 90%+ long including a massive $10.3 BILLION on Hyperliquid alone.
The same exchange the "whale" used. pic.twitter.com/P97S6zPcty
— The Kobeissi Letter (@KobeissiLetter) October 11, 2025
“The crash was the result of multiple technical factors converging at once,” the Kobeissi team wrote. “It doesn’t reflect deteriorating fundamentals. A correction was overdue, and we remain bullish on crypto’s long-term trajectory.”
Within hours, cascading liquidations erased more than $380 billion in total market value, marking the sharpest decline since the FTX and Terra/LUNA collapses. Yet, according to Kobeissi’s assessment, the downturn represents a structural reset rather than a systemic failure, a violent but necessary purge that could ultimately strengthen the foundation for the next leg of the crypto bull cycle.
