Did a $28B Deleveraging Drive Bitcoin Lower?
2026-02-04 • Ian Irizarry
TL;DR
ARK Invest CEO Cathie Wood says Bitcoin’s recent price drop was caused by a $28 billion deleveraging triggered by a Binance software glitch in October 2025, not because of any weakness in Bitcoin’s fundamentals. This event really highlights how important it is to grasp market forces and the strength of Bitcoin’s core value.
What Went Down in October 2025?
Here’s the thing: the crypto market took a big hit that month. Binance, one of the biggest exchanges, had a software malfunction that set off a chain reaction. Suddenly, $28 billion in leveraged positions started unraveling. It wasn’t your typical price dip; it was more of a massive system-wide shockwave that rocked the entire crypto scene.
So, What Actually Happened?
On October 10, 2025, Binance’s pricing system glitched. Some tokens were suddenly trading at almost zero, which is wild. Because of this, automatic margin calls kicked in, and liquidations piled up fast. Bitcoin, being the most traded asset, felt the most pressure, dropping nearly 14% — from over $122,000 down to around $105,000. I’ve found that these kinds of events show just how interconnected everything is CryptoNews
Cathie Wood’s Take
Cathie Wood from ARK Invest made an interesting point. She said this big drop wasn’t about Bitcoin’s fundamentals failing. Instead, it was triggered by that Binance glitch. According to her, moments like these, although nerve-wracking, are part of the market’s natural ebb and flow and might even set the stage for growth down the line AOL Finance
Why Deleveraging Matters in Crypto
Deleveraging means traders are cutting back on their borrowed positions, which can cause prices to tumble quickly. Given how much leverage is common in crypto, these events can shake things up big time.
What Causes Deleveraging?
Market Corrections: When prices get pumped up by too much leverage, a correction pulls things back down.
Unexpected Triggers: Things like software bugs or new regulations can spark sudden deleveraging.
Managing Risk: Traders often deleverage to avoid big losses during uncertain times.
The Bigger Picture
Although deleveraging can make the market super volatile in the short term, it usually clears out risky bets and helps the market stabilize after the dust settles. Just a heads up though—if you’re trading with heavy leverage, these sudden moves can wipe you out quickly.
What Companies Should Keep in Mind
For businesses hunting for funding, especially those navigating crypto waters, knowing these market swings is key.
Stick to Fundamentals: Even after the plunge, Bitcoin’s core value stayed strong, proving why focusing on the long haul beats chasing short-term prices.
Plan for Volatility: Have tactics ready to handle wild swings.
Be Open: Clear communication with investors during shaky times keeps confidence alive and well.
Frequently Asked Questions
Q: What caused the October 2025 Bitcoin price drop?
A: A Binance software glitch sparked a $28 billion deleveraging that led to Bitcoin’s price dropping around 14%.
Q: Did Bitcoin’s fundamentals change during this event?
A: Not at all. The price dip was due to market mechanics, not a change in Bitcoin’s intrinsic value.
Q: How can companies protect themselves during such market events?
A: By focusing on fundamentals, managing risk smartly, and keeping communication transparent with stakeholders.
Getting a handle on events like the October 2025 deleveraging is crucial for any company in crypto. When you stay informed and prepared, it’s easier to weather the storms and come out ahead.