I would like to present a microstructure view of this entire situation. As always, this thread is full of insights, charts, and comments.

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Firstly, when discussing this kind of dump, we need to determine where the pressure was greatest. We observed something crazy—Coinbase traders began selling aggressively almost an hour before the mega dump.

Of course, the biggest drop was triggered by a liquidation cascade, but this constant selling pressure was crucial in pushing the price into a region where overleveraged positions were forced to close. How can we tell that the market was overheated? It’s simple—the Funding Fee plus the increase in Open Interest.

These two factors are drivers of the current market and indicate that people are overleveraged.

You can see that BTC is different from any other instrument we have analyzed. What's important is the strong buying pressure that was generated on ETH after the drop.

The relative strength in recent days was also visible—could someone be buying?

I personally love analyzing market impacts. If I could focus on just one feature in the market, it would be market impacts.

And here, you see something crazy—the market impacts for $XRP P on Coinbase are mind-boggling.

Something absolutely strange happened. On a large, relatively mature market, we witnessed a cascade of big sell orders that caused the market to drop by over 5%. We don't know exactly what happened, but it's certainly unusual.

You can see that those sell orders are not normal. Something happened in the market. It might be worth monitoring this situation over the next few days. Perhaps a major player was forced to sell as if there were no tomorrow.

When something like this happens, it's typically a cascade of unintentional orders. Market makers absorb this selling pressure and hedge it, causing signal propagation across the exchanges. For perpetual swaps exchanges, this means that stop losses and liquidations are triggered, and the final impact is much more pronounced, especially if it occurs within a couple of minutes.

Remember, coins like XRP have been able to surge by hundreds of percent even though they have market caps comparable to the largest US companies. Relative to these market caps, the liquidity in the market is still poor.

The next thing you always see in a hot market is a quick price reversal from the lowest point. There are a huge number of liquidations, limited liquidity, and still many players in profit who want to buy the dip. Let’s see who comes out as the winner.

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