Panic swept across the crypto landscape overnight as a historic wave of liquidations erased billions in market value, leaving traders stunned and liquidity nearly vanished.

What began as routine volatility quickly escalated into chaos, with many altcoins plunging over 60% in a matter of hours – a collapse that some analysts say rivals the most violent moments in crypto history.

Market observer Benson Sun, once a community partner at FTX, described the event as more than a simple leverage washout. He argued that what unfolded was a massive liquidity vacuum – a scenario where major market makers appeared to have simultaneously stepped back, leaving thin order books and violent price swings in their wake.

Sun noted that liquidation volumes this time were far beyond previous sell-offs, reaching levels roughly ten times higher than what the market had seen during prior unwinds. The magnitude, he warned, hinted at deeper structural stress, not just excessive leverage being flushed out.

According to him, even traditional financial markets could soon reflect the same pattern of stress. “When liquidity evaporates this suddenly, it’s rarely contained within a single asset class,” he implied in his online commentary.

Observers compared the scale of this breakdown to the infamous crashes of March 12 and May 19, when cascading liquidations rippled through the industry. But Sun suggested that the latest decline surpassed those events in both depth and speed, describing it as the most comprehensive deleveraging crypto has ever witnessed.

Still, amid the wreckage, he sees a silver lining. Sun believes the violent reset has stripped away excessive speculation and left the market in a cleaner state heading into the year’s final quarter. With leverage nearly eradicated and sentiment crushed, he argues that conditions are now primed for a more sustainable rebound as the dust settles in late 2025.