Ethereum Leads Recovery After $20 Billion Liquidation Shock

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Bitcoin is trading at $115,157, steady after a volatile weekend that began with the largest crypto liquidation event in history, while Ether rose to $4,146, extending its recovery from Friday’s lows near $3,700.

Elsewhere, Solana gained 11% to $196, Bittensor jumped 28% and Cronos jumped 11%, according to CoinDesk market data, as capital returned to high-beta assets after $20 billion in leverage. Washington and Beijing worked to ease trade tensions over the weekend, helping the recovery.

Bitwise’s Jonathan Man points out that positioning is the key factor: leverage extended across long-tail tokens, so when liquidity disappeared the wipeout was severe – but it allowed for a quicker reset.

Staking also played a secondary role in cushioning the decline. With nearly 30% of the ETH supply locked in validators, but only a quarter of that circulating as liquid staking derivatives, the network structure created friction that slowed panic selling. Even as derivatives unwound, validator capital remained in place, mitigating what could have been a full-blown liquidity spiral.

But as the post-mortems come in, many fingers are being pointed at Binance.

Dragonfly’s Haseeb Qureshi questions whether Ethena actually deindexed, arguing that instead, $60-90 million in USDe, along with wBETH and BNSOL, were dumped on Binance, exploiting a pricing flaw that valued collateral using Binance’s own order book instead of external oracles.

As Binance’s infrastructure collapsed under heavy load, market makers were unable to hedge or rebalance their positions, according to the thesis, causing the wrapped assets to decouple from their underlying prices and worsening the sell-off.

The localized collapse drove USDe to $0.65 on Binance alone, while it held near $1 on Curve and Bybit. Since Binance’s unified margin system was a safeguard for its internal prices, the drop instantly wiped out hundreds of millions of margin value, triggering forced asset liquidations.

Ethena’s USDe protocol remained fully collateralized and redeemable throughout, suggesting the chaos was a failure on the exchange’s side, not a withdrawal of the stablecoin.

Binance has since acknowledged “platform-related issues,” moved to Oracle-based collateral pricing, and committed to compensating affected traders.

Looking back, Friday’s crash seems less like a stablecoin panic and more like a masterclass in exploiting the weakest structural link in an exchange.

In an article on Binance added that more than $280 million in compensation has already been paid to affected users and reiterated that it will not cover ordinary market losses.

For now, crypto’s cleanup has given way to a measured rebound, led by the assets that fell hardest and reset deepest.

Market movement

BTC: Bitcoin stabilized around $115,000 after falling nearly 9% on Friday and recovering about 4% over the weekend, as traders unwound their short positions and overall risk sentiment began to stabilize.

ETFs: Ether rebounded to around $4,150 after falling nearly 17% on Friday, recovering faster than Bitcoin as leveraged positions offset and DeFi activity resumed.

Gold: Gold hit a record high of $4,059.87 an ounce in early Asian trading Monday, as escalating U.S.-China trade tensions, rising geopolitical risks and expectations of Federal Reserve rate cuts fueled demand for safe-haven assets.

Elsewhere in Crypto:

• Aster Airdrop Delayed Due to ‘Data Inconsistencies’ With Token Allocations (Decryption)
• Securitized tokenization company reportedly in talks with Cantor SPAC (Bloomberg)
• Bank of America, Goldman Sachs and other major banks are ‘jointly exploring’ a stablecoin (The Block)