The crypto market is experiencing persistent, programmatic selling across major assets, reigniting discussions about the lingering effects of cascading liquidations from October 10. Many market observers believe that a sizable player may be in the process of being unwound, which is contributing to the current sell pressure.
On November 19, Tushar Jain, co-founder of Multicoin Capital, expressed on social media that it seems like a significant forced seller is influencing the market. He pointed out the systematic nature of the selling, particularly around specific hours, which he associates with the ramifications of the October 10 liquidation shock. Jain remarked, “Hard to imagine this scale of forced selling continues for much longer,” suggesting that the market may see relief in the near future.
Jain’s perspective is shaped by his experiences in similar market conditions during 2022. Following the October 10 event, he noted on October 11 that the fallout from such liquidations often reveals itself over time, as firms scramble to assess their exposure to insolvent counterparties. He highlighted that this process can take weeks or even months, contingent on how market participants address their financial vulnerabilities.
Systematic Sell Pressure Points To Forced Crypto Seller
The narrative surrounding a potential forced seller is gaining traction, as more market participants echo Jain’s observations. LondonCryptoClub noted that it increasingly feels like the market is witnessing someone being compelled to liquidate a portfolio. They likened the repetitive nature of the sell pressure during U.S. trading hours to occurrences in foreign exchange markets, where sudden flows often relate to significant corporate liquidation events, concluding that a “dead body will probably float to the surface soon.”
James Seyffart, an ETF analyst, responded to Jain’s comments by pondering who the mysterious forced seller might be, highlighting the absence of credible public speculation at this time.
Rumors of structural issues within the market started surfacing shortly after the October events. On October 12, The Rollup co-founder Andy Klages indicated that speculation suggested two large trading firms had been liquidated to zero. He described a scenario in which these firms had significant holdings in top cryptocurrencies, which were used as collateral against each other. This situation could have forced them into becoming market sellers of their entire asset portfolios.
While no firms have confirmed such massive losses, Klages’ insights resonate with many analysts who perceive a critical vulnerability in cross-collateralized altcoin portfolios used for trading and margin. Fundstrat and Bitmine’s Tom Lee echoed this sentiment on November 15, suggesting that recent price actions reflect signs of a market maker or two facing severe balance sheet issues. He warned of market players who might aim to trigger liquidations to push prices down for $BTC, yet he remains optimistic about the long-term prospects for Ethereum and its potential future growth.
To date, there is no definitive evidence of a major entity’s insolvency connected to the significant market movements following October 10. Yet, the assortment of reports regarding systematic sell programs, fears of cross-collateralized books being blown out, and references to hidden financial holes indicate that the crypto markets may still be navigating the aftermath of those forced liquidations.
As of now, the total cryptocurrency market cap rests at approximately $3.1 trillion, yet it is clear that the psychological impacts of October 10’s turmoil continue to reverberate through the trading landscape.
