[Analysis] Wintermute: “A different adjustment phase from the FTX and Luna crises… not a structural crisis”

As Bitcoin (BTC) has fallen and large-scale liquidations have occurred, an analysis has emerged that bearish momentum in the crypto market is deepening due to the accumulation of macro headwinds. At the same time, some argue this is not a phase of structural collapse like in the past.

On the 2nd, crypto (digital asset) market maker Wintermute said on X (formerly Twitter) that “leverage built up amid mounting macro uncertainty, and ultimately large-scale liquidations occurred during a weekend liquidity gap,” adding that “this decline is the result of positioning and sentiment breaking down simultaneously, not a single negative catalyst.”

According to Wintermute, forced liquidations totaling about $2.55 billion occurred over the weekend— the 10th-largest liquidation event in the history of the crypto market. Wintermute explained that “selling pressure was concentrated over the weekend, when liquidity is traditionally thin, and the unwinding of previously built leverage all at once amplified the shock.”

As for the backdrop to the drop, Wintermute pointed to three macro narratives rather than a single trigger. “The market digested three factors over several days—disappointing Big Tech earnings, the issue of the Fed chair nomination, and the cooling of overheating in precious metals,” Wintermute said, adding that “ultimately all of these factors simultaneously triggered a shift toward risk-off.”

Regarding Kevin Warsh, who has been mentioned as a candidate for Federal Reserve (Fed) chair, Wintermute offered a view different from initial interpretations. “Warsh was skeptical of quantitative easing in the past, but more recently he has characterized the U.S. economy as entering a high-productivity, low-inflation regime and has mentioned the need for rate cuts,” it said, adding that “the dollar’s strength is closer to a reaction to real-economy data—given the Chicago PMI significantly beat expectations—than to policy expectations.”

It also said tech earnings and the narrative around investment in artificial intelligence (AI) affected market sentiment. “Microsoft’s results weren’t fatal, but they were sufficient to shake confidence in AI infrastructure investment,” Wintermute said. “When the AI narrative wobbles, crypto is always the first to be categorized as a risk asset.”

Wintermute also commented on the sharp drop in precious metals. “The plunge in gold and silver is not the collapse of a currency-debasement narrative; it is the result of excessive speculative positioning being cleared out via margin calls,” it said, adding that “given silver had risen in a parabolic fashion, the unwind was inevitably mechanical and violent.”

As for market conditions, it clearly characterized the environment as a bear market, while emphasizing differences from past crises. “We are clearly in a bear market,” Wintermute said. “However, this cycle is not the result of structural failures like FTX, Luna, or 3AC, but rather a natural deleveraging driven by the macro backdrop and shifts in narrative.”

It continued: “It matters that there are no forced bankruptcies or a contagion crisis,” adding that “infrastructure has become more resilient, stablecoin adoption continues to rise, and institutional capital has not disappeared— it is simply waiting on the sidelines.”

Wintermute also said about the path ahead that “this is a phase where caution dominates over conviction,” while adding that “if a rebound emerges, this cycle could unfold with a clearer trend reversal than in past bear markets.”