Novogratz Says Excess Binance Leverage Sparked the Selloff

• $19B in crypto positions were liquidated on Oct 10, with 70% erased in 40 minutes amid heavy leverage.
• Mike Novogratz said excess leverage on Binance triggered cascading forced liquidations.
• The Oct 10 selloff was driven by margin calls and derivatives unwinds, not macro news.

A $19 billion liquidation event shook the crypto market on October 10, with most losses occurring within minutes. Galaxy Digital CEO Mike Novogratz attributed the sharp decline to excessive leverage, particularly on Binance. He said the selloff was largely driven by forced liquidations rather than broad macroeconomic factors.

$19B Liquidation Unfolded Within Hours

Traders liquidated approximately $19 billion in crypto positions within 24 hours on October 10. About 70 percent of those liquidations occurred in roughly 40 minutes. The speed of the move drew attention across trading desks and exchanges.

Liquidation data showed a rapid unwinding of leveraged long positions. As prices declined, margin calls increased and automated systems triggered further selling. This created a feedback loop that intensified volatility.

Derivatives markets often drive such events because traders use borrowed funds. When prices move sharply against leveraged positions, exchanges close trades to limit losses. This process can accelerate price swings.

Novogratz Points to Binance Leverage

Mike Novogratz said leverage on Binance played a central role in the event. He stated that excessive borrowing amplified the downside move. According to him, leverage did not only affect retail traders but also market makers.

“When leverage stacks up in one direction, it doesn’t take much to tip the domino,” Novogratz said. He explained that once liquidations begin, forced selling increases. Spreads widen and liquidity thins, which can push prices lower quickly.

Novogratz described the damage as mechanical rather than macro-driven. He said the selloff reflected overextended positioning. In his view, the event did not necessarily signal long-term capital leaving the market.

Market Structure and Leverage Risks

Leverage allows traders to control larger positions with less capital. However, it increases both potential gains and losses. When markets move rapidly, leveraged positions can unwind in clusters.

Novogratz noted that when traders build too much of the market on borrowed capital, volatility compounds. Forced liquidations can create cascading effects across exchanges. This structure can turn moderate price moves into sharp corrections.

He also said that clearing excess leverage may reset market conditions. According to his remarks, removing overextended positions can reduce immediate pressure. The focus now shifts to how exchanges and traders manage leverage levels after the $19 billion event.

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