Market volatility wiped exchange liquidity, OTC desks took charge

Cryptocurrency investors suffered one of the biggest financial hemorrhages last Friday. However, according to a report by Finery Markets, over-the-counter (OTC) desks were the “shock absorbers” that prevented the liquidation scuffle on Binance from spreading to the broader digital asset ￰0￱ and defi exchanges felt the pain of US President Donald Trump’s announcement of an additional 100% tariff on Chinese imports and new export controls on ￰1￱ statement triggered mass panic, prompting crypto holders to sell their tokens, which in turn tanked the market. Cryptopolitan, citing data from Coinglass, reported that over $20 billion worth of leveraged crypto bets were wiped out in less than 24 ￰2￱ fell more than 12% from its weekly high of over $124,000, hovering near $113,000 by early Saturday morning on ￰3￱ than 1.6 million traders were liquidated, and over $7 billion in positions were unwound in just one hour of ￰4￱ volatility wiped exchange liquidity, OTC desks took charge According to Finery Market’s insight, volatility in Ethereum and altcoins swept through to stable assets like Ethena’s synthetic dollar USDe, Wrapped Beacon Ether (wBETH), and Binance Staked SOL (BNSOL).

The losses extended into decentralized finance (DeFi), where several pools’ liquidity was heavily ￰5￱ briefly dropped down to 65 cents on Binance when sell orders started trickling in fast, but maintained its peg on Curve, Fluid, and ￰6￱ Markets noted the go-to crypto trading platforms had “a symptom of localized stress,” adding that panic and selling caused liquidity depletion on centralized exchanges (CEXs). “The crisis showed the value of secondary trading conducted through OTC private rooms,” the firm noted. “This infrastructure is a firewall against systemic contagion due to the fundamental difference in order book structure.” CEXs purportedly use visible liquidity through public order books, but OTC desks have private execution between ￰7￱ “dark liquidity,” Finery said, helps tone down systemic risk and prevents bank-run-like scenarios triggered by mass sell orders.

“OTC markets provide a structure that allows participants to trade large volumes without revealing their ￰8￱ mitigates panic-driven contagion during high-volatility events,” Finery ￰9￱ the three-day window between October 10 and 12, trading volumes in Finery Markets’ private BTC/USDT and ETH/USDT rooms surged 107% ￰10￱ comparison, centralized platforms saw a 48% increase in the same ￰11￱ vs centralized exchanges’ bid-ask spreads.) are still on a roll, but they recorded $102.58 million inflows on Tuesday, according to SoSo Value ￰12￱ your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.