Novogratz Attributes October 10 Selloff to Excessive Binance Leverage

A $19 billion liquidation event occurred on October 10 in the crypto market, with 70% of the losses happening in just 40 minutes. Galaxy Digital CEO Mike Novogratz attributed this to excessive leverage, particularly on Binance according to Novogratz. The selloff triggered a cascade of forced liquidations and margin calls, compounding volatility across the market. This event marked one of the most intense corrections in crypto history.

Binance co-CEO Richard Teng defended the exchange against claims of being the primary cause. He cited U.S. tariff threats and Chinese rare-earth export controls as the broader triggers for the selloff as reported. Teng noted that the selloff was not Binance-specific, impacting both centralized and decentralized exchanges. He emphasized that trading data showed no mass withdrawals during the event.

The October 10 liquidation also mirrored broader market turmoil. U.S. equity markets saw $150 billion in liquidations on the same day, indicating a synchronized selloff across asset classes according to TradingView. Novogratz, however, attributed the event to leveraged positions being unwound on Binance, leading to a feedback loop that exacerbated volatility according to Novogratz.

Why Did the October 10 Selloff Happen?

According to Novogratz, excessive leverage on Binance played a central role in the selloff according to Novogratz. When leveraged positions are overextended in one direction, even minor price movements can trigger cascading liquidations. This mechanical process, rather than macroeconomic news, was the primary driver of the event. The feedback loop from forced liquidations intensified volatility in the short term.

Binance's co-CEO, Richard Teng, countered this by pointing to external macroeconomic and geopolitical factors as reported. U.S. tariff threats and global financial uncertainty created a shift in risk sentiment. Teng described the selloff as a classic leverage flush in the crypto market, not caused by Binance alone. He noted that all exchanges experienced similar levels of turmoil.

How Did Markets React to the Liquidation Event?

The selloff had a profound impact on both crypto and traditional markets according to TradingView. Bitcoin dropped sharply, reaching a low of $60,033 within 14 days of the event. Nearly half of circulating Bitcoin is now held at a loss, highlighting the systemic risks in the crypto market according to Amber Data. The ETF-era feedback loop—where outflows reduce liquidity, trigger further price declines, and amplify redemptions—created new dynamics not seen in prior bear markets.

Institutional and retail participants faced significant losses during the selloff according to Amber Data. The collapse of the basis trade and reduced order book depth exacerbated the downturn. The event also highlighted the structural fragility of the crypto market, including the failure of Bitcoin as a reserve asset during periods of heightened volatility.

What Are Analysts Watching Now?

Analysts are closely monitoring how leverage and liquidity dynamics evolve in the crypto market according to Novogratz. The October 10 event demonstrated how overextended positions can amplify volatility. Novogratz emphasized the importance of managing leverage to prevent future selloffs. Binance has taken steps to support affected users, but traders continue to question the exchange's transparency.

The broader implications of the selloff extend beyond Binance as reported. Teng acknowledged minor platform issues, including stablecoin depegging and asset transfer delays, but argued these were unrelated to the selloff. He emphasized the importance of institutional and corporate participation in crypto despite recent retail demand cooling.

Market participants are also watching for further policy and regulatory developments according to TradingView. The selloff coincided with hawkish Fed decisions and global financial uncertainty. As crypto markets continue to integrate with traditional asset classes, regulators are under pressure to address structural risks and ensure market stability.