BREAKDOWN: The Real Story of the Crypto Crash Has Very Little to Do With Elon or China
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 20 May 2021
⏱️ 14 minutes
🧾️ Download transcript
Summary
It wasn’t narrative but market structure that drove yesterday’s big move down.
This episode is sponsored by Nexo.io.
In this episode of “The Breakdown,” NLW looks at the market structure dimension of the crypto crash, leveraging insights from Alameda Research, Willy Woo and many more. He explores:
- Why the recent bull run was driven by derivatives more than by spot trading
- How crypto moving onto exchanges signaled the big move down
- How cascading liquidations made the down moves even more extreme
- What the industry thinks about 100x leverage
- Insider reports on how institutional investors responded
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Transcript
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| 0:00.0 | To be clear on the scope of these liquidations, I gave you the broad numbers yesterday, the |
| 0:04.4 | aggregate approaching 10 billion. But to me, the bigger crazy number is 775,000 traders who had their |
| 0:10.8 | accounts liquidated. That is a huge move. And part of what made this extra crazy is that, on the |
| 0:16.9 | way down, the apes kept opening up levered longs trying to catch the bounce back, |
| 0:21.2 | and then getting those liquidated as well. So even the attempts to counter the move down |
| 0:25.5 | ended up contributing to the overall picture. Welcome back to The Breakdown with me, |
| 0:32.1 | NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:40.1 | The breakdown is sponsored by nexo.io and produced and distributed by CoinDes. |
| 0:46.8 | What's going on, guys? It is Thursday, May 20th. And man, we had a hell of a day yesterday. |
| 0:57.0 | Truly one for the record books. I think I read it was Eith's second worst day on record. It saw Bitcoin touch lows that it hadn't seen since |
| 1:01.9 | February. And the dynamics of the crash were particularly shocking. It was like watching the |
| 1:07.3 | free fall of this entire industry. Yesterday felt like some combination of people |
| 1:12.2 | scrambling to get out, people scrambling to get in, people scrambling to explain which |
| 1:16.2 | fud it was that had caused this thing, and then of course people scrambling to make their |
| 1:20.2 | prognostications about where we go next. Now, however, we've had a full day, which is the |
| 1:25.6 | crypto equivalent of a week in normal markets, under our |
| 1:28.4 | belts. We've recovered a lot of the losses. Bitcoin is literally all the way back at 42,000, |
| 1:33.2 | where it started. We've reset our positions, and we've had a chance to more dispassionately explore |
| 1:39.2 | what happened. If you listened to the show yesterday, you heard me go through each of the big areas of |
| 1:45.1 | fud and argue that the issue ultimately wasn't any one of those concerns, but an overall market |
| 1:52.8 | narrative fatigue, nervous newbies, and liquidations that made everything more extreme. Today, I want to |
| 2:00.0 | expand on that using a ton of great analysis |
... |
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