"500 Billion Crash in the Crypto Market: Time to Wake Up"

In recent days, the significant drop has led to a loss of $500 billion in the cryptocurrency market, serving as a crucial wake-up call for investors. Experts assert that this situation has painfully highlighted the leverage risks in the market.

US President Donald Trump's announcement over the weekend of a 100% tariff on China created panic in the crypto market, causing a selling wave that began on Friday evening and resulted in a more than 10% drop in total market value. Approximately $20 billion worth of positions were liquidated during this process, which is considered one of the largest liquidation events in crypto history.

Lucas Kiely, CEO of Future Digital Capital, emphasized that this collapse has revealed the dangers of excessive leverage usage, stating, "Using high leverage in a market with such low liquidity, close to the peak of the cycle, is extremely dangerous." Nic Puckrin, founder of Coin Bureau, also expressed that institutional investor interest and spot ETFs have created a false sense of security among investors. According to Puckrin, the combination of thin liquidity and excessive leverage creates a 'toxic mix.'

Puckrin further highlighted that many investors were liquidated from their profitable positions due to the automatic liquidation (ADL) system. Experts note that the closure of long positions accelerated the price decline, creating a self-feeding vicious cycle.

Bitcoin's price dropped to as low as $100,000 over the weekend before stabilizing. Ethereum is currently trading around $4,200. Puckrin stated, "This drop has cleansed the excess leverage in the market, but Bitcoin needs to break through resistance levels to reach a new peak." Gate manager Kevin Lee mentioned that the anticipated Fed rate cut at the end of October could be a calming factor for the market, while geopolitical risks may create pressure in the short term. However, he noted that in the long term, institutional inflows and on-chain supply tightness are strengthening the fundamentals of crypto.

Meanwhile, Wharton University professor Jeremy Siegel indicated that Bitcoin is still not a strong hedge against geopolitical risks, stating, "While gold and bonds are gaining value, Bitcoin has fallen. It is not yet at that point for those looking to hedge short-term risks."