Galaxy Digital CEO Mike Novogratz said the Oct. 10 cryptocurrency crash eliminated approximately 30% of market makers on some platforms, marking what he described as significant structural damage to the digital asset ecosystem. In an interview with Anthony Scaramucci on Nov. 26, Novogratz characterized the event as far more severe than a typical market correction.
What Happened: Oracle Malfunction Triggered Cascade
The crash originated from a price oracle malfunction at Binance, according to Novogratz. The technical error affected a synthetic stablecoin and created a cascade of forced liquidations as incorrect pricing data propagated through the system.
Perpetual futures markets on platforms including Hyperliquid and Uniswap amplified the damage as falling prices triggered automated liquidations of leveraged positions.
Bitcoin dropped to $80,000, while XRP fell to $1.80 and Solana declined to $125. Novogratz said he initially expected support at $90,000 for Bitcoin. On Hyperliquid specifically, roughly one-third of market makers were eliminated, he said.
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The structure of perpetual futures contracts made the crash particularly damaging for liquidity providers. These instruments automatically pair liquidated long positions against short positions during rapid declines.
Market makers holding offsetting positions across multiple exchanges faced losses when their short positions were closed out while long positions on other platforms remained exposed.
Why It Matters: Leverage Amplifies Volatility
Novogratz attributed the severity to how cryptocurrency traders deploy leverage. Participants seek returns of 1,400% or more by trading volatile assets with substantial borrowed capital, he said. The crash eliminated retail traders and reduced overall market liquidity, effects he said will take time to reverse.
He expects Bitcoin to approach $100,000 by year-end but anticipates sellers at that level.
The rebound from $80,000 reflects Federal Reserve policy shifts rather than restored market confidence, according to Novogratz.
One seller moved $9 billion in Bitcoin, representing one-third of BlackRock's IBIT exchange-traded fund inflows for the year, he said.
Novogratz described a broader transition in how cryptocurrency is valued. The market is moving from narrative-based pricing toward evaluation of actual business fundamentals and token utility, he said. Some projects generate revenue while others lack clear economic purpose, creating differentiation among digital assets.
He pointed to Federal Reserve rate cuts and reduced bank cash requirements as supportive factors for cryptocurrency prices. The central bank will lower rates to 2% over 16 months while inflation rises, creating negative real interest rates that historically benefit digital assets, he said. Bitcoin traded at $91,115 at press time.
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