Crypto Markets Rebound After $500B Crash, Paving Way for Q4 Recovery

By Francisco Rodrigues (All times ET unless specified otherwise) A severe and rapid downturn resulted in the loss of over $500 billion in crypto market value on Friday, triggering forced liquidations, collapsing wrapped tokens, and approximately $20 billion in liquidations, while also putting a strain on exchange infrastructure. According to Bitwise portfolio manager Jonathan Man, this flash crash may be the most significant liquidation event in crypto history, wiping out $65 billion in open interest and resetting positioning to levels not seen since July. During the crash, Bitcoin dropped 13% in just one hour before rebounding, while some tokens experienced flash crashes of more than 40%. Since then, the market has been recovering, with the CoinDesk 20 index now up 7.7% over the last 24 hours, despite still being down 7.4% from the crash. Infrastructure failures on Binance led to significant price divergences between wrapped assets like wBETH and BNSOL and their underlying assets. wBETH, which tracks ether, fell as low as $430 while ETH traded above $3,800. Binance has pledged to compensate affected users and has switched to a more stable conversion-based pricing model for wrapped assets. Deus X Capital CIO Stuart Connolly stated in an email, "Issues with market structure, including large derivative exchanges liquidating users regardless of margin, uptime issues, and price dislocations of stablecoin and liquid staking assets from their underlying collateral, have all contributed to the current situation." "The 'Perp Dex' narrative has taken a step back, and the market needed a reset. If President Trump's stance softens, as it appears it might, we can expect crypto assets to rise in Q4," he added. The ongoing U.S. government shutdown has resulted in markets operating without key data. Amid risk-off sentiment, gold has continued to rally, supporting tokens like PAXG and XAUT, which are backed by the precious metal, near $4,090. Today, U.S. markets will remain closed, and traders will be watching how the market reacts as liquidity increases after the weekend. None of the typical crypto market cycle top indicators have been triggered yet. Remain vigilant. Key Events to Watch For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead". Upcoming Token Events For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead". Conferences For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead". Token Talk By Oliver Knight Derivatives Positioning Market Movements Bitcoin Stats Technical Analysis Crypto Equities Crypto Treasury Companies ETF Flows Spot BTC ETFs Spot ETH ETFs Source: Farside Investors While You Were Sleeping