Was This the Top?

[00:01] liquidation in crypto history and it all happened at the top of the market. The end of the cycle is here according to this anonymous 4chan user. Ladies and gentlemen, welcome back to another CryptoGorilla video. In today's video,

[00:14] we're going to be taking a deep dive into what happened over the weekend with the event that liquidated 1.6 million traders and $19 billion in value. what it means for crypto going forward and is this really the end of the cycle. As

[00:30] usual, I am not a financial adviser. Hit the subscribe button if you haven't already done so and let's jump right into it. So, last Friday, we witnessed the largest liquidation event in crypto history where $19 billion was wiped out.

[00:44] This does not mean 19 literal billion dollars of cash. It is a leveraged position. So, we don't actually know the real amount as people are trading with real amount as people are trading with anywhere from 2x leverage to a,000x on

[00:57] some platforms. However, it is still the largest in history by far, 10 times bigger than the 2020 crash, than the FTX crash. And it all started with a post on Truth Social by Donald Trump threatening massive tariffs on Chinese produced

[01:13] products coming into the United States after China introduced export controls on rare earth minerals. Now, this did send all markets in a downward spiral. It was not limited to crypto. We saw 1.6 trillion be wiped out from the stock

[01:28] market. However, the true blow came after hours once the stock market was closed. However, crypto never closes when Trump announced a 100% tariff was going to be imposed on China starting on November 1st. And with this news, we got

[01:43] a massive market selloff in the entirety of the crypto market. and we saw prices I never thought we'd see even in the next bare market. And unfortunately, a ton of people got liquidated. Some even lost the entirety of their portfolio.

[01:58] that possible? If you never hit the sell button, you don't actually lose your money. And if we look at the markets over the weekend on Sunday, we've pretty much recovered a good amount of what was lost. And the reason for this is a lot

[02:13] of people are trading with leverage, especially those using cross margin leverage, which puts the entirety of your portfolio at risk. Now, with the October narrative, a lot of people were extremely bullish. They thought the

[02:27] altcoin season was finally coming. It was going to be up only. So, the perfect storm was brewing as more and more people became long and overleveraged themselves, especially inexperienced traders who only recently started

[02:41] leverage trading in order to get a token airdrop and because they're seeing people all over the timeline post how easy it is to make a 50x return on your money. Now, over the last couple of weeks, this has very much been reminding

[02:54] me of the recent surge in memecoin mania through these memecoin launchpads like Pump Fun and Bonk. We had the Memecoin Launchpad War where literally every single week a brand new launchpad was popping up. My DMs were being flooded

[03:09] almost daily sometimes by a new platform that wanted video exposure. They wanted me to make a tutorial on how to use their platform. And in many cases, it made sense to pay attention to these new memecoin launchpad platforms because

[03:22] there was an opportunity to catch the first runner. In a lot of the cases, the teams themselves were artificially pushing a token in order to get attention onto their platform. So, if you were able to catch it, you were able

[03:35] you were able to catch it, you were able to make an easy 10, 50, 100, even a,000x in some cases. And we did see literal overnight millionaires be created which post it on the timeline. It creates FOMO. You want to get in because you

[03:50] feel like you're missing out like how easy it is to make this kind of money. But in reality over 90% of traders on these Memecoin Launchpad platforms lose money. So it is not easy at all. It is just the illusion that it's easy to make

[04:05] in which is beneficial to these platforms because whether you win or lose, whether you're selling or buying for profit or loss, they are making their fee. They are making hundreds of millions of dollars. Now, the same is

[04:19] true for these perplexes. They make a fee whether you're trading for profit or longing. And due to the overwhelming success of Hyperlid, which did steal a

[04:32] good amount of market share from a ton of centralized exchanges, meaning it stole a lot of their users as well as their fees, we are seeing a flurry of perplexes being launched who want to take a piece of that pie. And the way

[04:46] they're drawing people in is with the promise of a token airdrop. So, a lot of newcomers who want free money in the form of a token airdrop are rushing to use these platforms even though they have no business leverage trading.

[05:00] more than likely going to get wrecked chasing a token airdrop. Now, similar to the Memecoin Launchpad, my DMs have also been filled with a ton of brand new perexes that want exposure. And just to name a few of the top ones so you get an

[05:16] idea of how many they are and a lot of these platforms are actually really good. They have amazing interfaces and I personally use them myself to trade. So, I'm not attacking any of these platforms, but we have Lighter, we have

[05:28] Edex, we have Paradex, we have Apex, and more recently, the one that caught the attention on the timeline of all of CT was Aster, which is a Binance Smart was Aster, which is a Binance Smart Chain per Dex that CZ himself pushed and

[05:43] had been teasing for a while. And the token performed incredibly well, running from 8 cents all the way above $2 in a matter of two days, creating once again overnight millionaires. But on top of that, they also have an airdrop farming

[05:58] campaign. And with the success of the token being at $20 billion at the top, to their users. So everybody was flocking to the platform. CZ was pushing it really hard. And we had a BNB

[06:13] listed on Aster, they would go parabolic. So, it made a ton of sense to you're going to be trading memecoins there, you might as well farm the airdrop, which requires you to leverage trade. So, these platforms pulled

[06:28] everybody in with the promise of a token. People had money on the line that they normally wouldn't. And with this liquidation event, a ton of people got wrecked. Now, how is it possible that these traders lost millions of dollars

[06:41] if they never hit the sell button? And that's because they are trading with kinds of leverage. But essentially, leverage means trading with money you don't actually have. If I open up a $100 trade, I'm able to leverage it anywhere

[06:58] from 2x all the way to 100x on certain platforms. Meaning rather than taking a platforms. Meaning rather than taking a $100 position into a short or a long on a token, meaning I'm betting if it's going to go up or down, my $100 can

[07:11] actually be a $10,000 position. So, if the coin goes up or down 2x depending which way I'm betting, instead of making $100 profit, 2x on my money, I'm making

[07:23] $10,000 because my position size is technically $10,000. However, the risk here is that you don't actually own the crypto. Unlike spot where if I go buy

[07:35] $100 of Bitcoin, I actually own the Bitcoin and if it goes down 99%, all I have to do is hold it till it recovers and I'm made whole. Whereas, when you're trading with leverage, if the token goes down or up, depending the direction

[07:51] you're betting, there is what's called a liquidation price. Meaning, if it hits that price, you lose your $100. Now, that is the case for isolated leverage trading, meaning your risk is isolated to your position size, my $100. However,

[08:07] many platforms offer what's called cross margin, which uses the entirety of your portfolio as collateral for your trade. And the benefit here is my liquidation price is much lower than it would be with isolated leverage trading. So, for

[08:24] example, if I'm longing Bitcoin and my liquidation price with with isolated is $105,000, if it goes to $105, I lose my trade. I lose my position. But with cross margin, if I have $10,000 in my account and I

[08:40] only take a $100 position, my liquidation price might be $5,000, which most people would say that is never going to happen unless some crazy event takes place, which unfortunately that's exactly what happened over the weekend.

[08:53] Now, there is a defense in case this happens called a stop-loss, which is a number you're able to put in that says, "Hey, if it goes down this much, cut my position. I'll take the loss. Maybe I'll take a $20 loss, but I'll lose $20 on my

[09:09] $100 trade instead of losing the entirety of my portfolio. But the price went down so fast and a lot of exchanges had glitches in them that many people's stop-losses didn't trigger and they lost the entirety of their portfolio even

[09:24] though they were being safe with a stop-loss. And just looking at the prices that some of these tokens went down to, Cardono went from 80 cents down to 30 cents. Link went from $22 down to $8. Save from 28 to 7. Aptos from $5 to

[09:42] $8. Save from 28 to 7. Aptos from $5 to 75. Suie $3.40 75. Suie $3.40 to 56. And Adam went from $4 all the way to sub a penny, which these numbers depend on the platform you were trading

[09:56] on. However, we saw pretty much every coin go to insane prices. Here we have Hyperlquid, which just recently was trading for $51 go all the way down to $20. So, in a lot of cases, tokens like Atom,

[10:11] for example, the odds that your liquidation price was below 2 cents was extremely low. Most people probably had it anywhere from uh $3, if you're using cross margin, maybe it was even under $1. and you thought, "Hey, when's the

[10:25] last time it was actually under $1?" It was a very long time ago. It was back in 2020, so it's never going to get there. However, unfortunately, it did. And although it seems unfair, there's pretty much nothing you can do. I assume

[10:39] because of this and what happened on exchanges, but odds are you're not going couldn't have predicted this event happening, if you were lucky enough to have a short position opened, you could have made a lot of money to which some

[10:54] people are upset because exchanges forced closed their positions. Meaning if you had a short open and you saw the value of your portfolio go up and up and up and you didn't have a takerit, you didn't manually click to close the

[11:08] trade, it was just closed anyways. And this is due to something called auto deleveraging for which I will put this great explainer post in the description what this means, which I had no idea this was the case, there's no crypto

[11:24] involved in this kind of trading. And it's basically just people betting against each other on two different ends. And the market went down so fast that the order book was empty. Think of it like going to a casino and playing

[11:37] poker against other people and you wipe out all the other players. At one point, against. Even though you want to continue making money, there's nobody left to pay you out. So, the value of your trade can't continue to go up

[11:50] because there's nobody betting against you on the other side and they forced closed your position. Now, speaking of having a short opened, a lot of people are talking about this insider who

[12:02] seemingly had information before this dropped as he took a massive short position 30 minutes before the first tweet. However, even though he was already in profit, he continued taking massive shorts up until 1 minute before

[12:18] the second tweet by Trump saying there was going to be 100% tariffs. And this trader ended up closing his position with near $200 million in profits. And

[12:30] the beauty of using a platform like Hyperlid, there's no KYC. So, we have no idea who this person is, and odds are they're going to get away scot-free. So, Coffeezilla made a wonderful video covering this in its entirety. Again, I

[12:43] below. Now, shorting wasn't the only way to make money. If you were online, if you were lucky enough to see this dip and catch a coin like Sooie go down to 56 cents and your exchange worked because a lot of exchanges did have

[12:58] issues, you could have caught some of these tokens like Sooie as low as 56 cents and maybe you didn't just spot buy it. Maybe you leverage longed it back on better than a little bit of leverage to

[13:10] fix what just went wrong with leverage. So now the big questions people have with this event that just happened is what does this mean for the rest of the bull market? Are we actually ever going to get an altcoin season? Is the cycle

[13:22] over before it even started? Is there even still a 4-year cycle in play? Or is that totally ruined? And while nobody can predict the future, even though they might have predicted it, nobody knows what's going to happen. They're all just

[13:35] trying to take their best guess. I can tell you what I believe is going to happen and what I am currently watching. Now, the good news like we saw is the market has mostly recovered. We still have a lot of tokens that are down like

[13:47] Hyperlid was just trading at 50 bucks. It's still sub40. We have coins like Avalanche that were just above 30. It's around $22. So, altcoins did get hit really hard and have not fully recovered. Same thing for NFTTS, which

[14:01] is the niche that I play in. Even though a lot of these are green on the daily, where they were. Especially Pudgy Penguins. There was a huge deleveraging that just happened with some blur loans. Over 300 Pudgies were underwater and we

[14:17] Over 300 Pudgies were underwater and we saw it dump all the way down to sub6 ETH, which is crazy. They're already back to 8 ETH. So, a great buying opportunity if you did catch the bottom. But we are still not out of the water.

[14:30] We are still at the whims of whatever happens with this trade war. Just today, we had a few different posts. We have China declining a call with the US. We have Trump trying to calm things down, which kind of also sounds like a threat.

[14:43] President Z doesn't want a depression for his country. Neither do I. And I think most people are unaware that the date of November 1st is significant as date of November 1st is significant as on October 31st we have the apex summit

[14:57] where China and the US are supposed to meet to discuss all this stuff. So I think both sides are just kind of bluffing and really pushing each other as they enter into negotiations and it's us the market participants who are going

[15:10] to suffer as a result until they figure all this stuff out. Now, as for the tariffs, it seems like the market is not buying what Trump is saying. The poly actually going to go into effect on November 1st are currently down to 15%

[15:25] which gives you an idea of the sentiment of the market. So hopefully this does cuts at the end of the month and everything is positive and we can continue moving up. And in my opinion, all this happening has not changed the

[15:40] market fundamentals, and this was just another mega leverage flush out. Now, in terms of the cycle being over, I did see this post uh go viral on Twitter about some anonymous 4chan user pretty much calling so far, it seems like he called

[15:55] it perfectly the top of October 6th. Typically, it's around now that the four-year cycle would end. If you still believe in the four-year cycle, personally, I do not anymore. I think it was just timed perfectly with the

[16:07] liquidity cycle. However, with everything that's going on with the Fed, with more rate cuts supposed to come up, with quantitative easing finally happening, meaning they're going to print more money, with the average

[16:19] maturity of debt going from 4 to 6 years, I think the game has changed. There is no longer a 4-year cycle, and we are entering brand new territory where we're actually going to get an extended cycle into next year, which

[16:32] be totally wrong. We will find out by the end of November if I'm wrong or if we do actually head into next year where prices do continue to go higher. And I is very toppy. Everybody's calling for a

[16:46] bubble in crypto in AI. However, none of these cycle top indicators have popped off. We have zero of 30 that have actually hit which this has been an amazing indicator in the past to figure out when the top of the cycle is in and

[17:01] when we should sell if you want to sell your crypto and not hold it over the next 10 20 years. So for me I actually bought more crypto on this dip just dcaing into things I like. I also often take profits on trades just to pay for

[17:15] my everyday life. However, I found this was a great buying opportunity. hopefully we continue going higher. But with that, that is the end of today's video. I hope you found it informative. If you did, be sure to give it a big

[17:28] Thank you for watching another CryptoGorilla video. Peace. [Music]