Bitwise Chief Investment Officer Matt Hougan addressed last week’s record $20 billion liquidation in bitcoin markets, calling the flash crash a short-term event driven by excessive leverage rather than a breakdown in fundamentals.
Market reaction to trump’s tariff threat
The turmoil was sparked by President Trump’s announcement of 100% tariffs on Chinese imports following threats from China to restrict rare earth metal exports.
In response, traders rushed to exit leveraged positions, causing bitcoin to fall as much as 15% toward $100,000 on some exchanges.
No systemic failures detected
Hougan emphasized that no major institutions or critical infrastructure failed during the selloff. Losses were mostly limited to individual traders. He noted in a memo to clients:
“Firms experienced losses, but it looks like they’ll all survive.”
Blockchain platforms such as Uniswap and Aave performed reliably, while some centralized exchanges, including Binance, refunded hundreds of millions of dollars to users after platform-specific issues.
Investor sentiment remains resilient
Despite the sharp moves, professional investors largely remained unfazed.
Hougan observed that his inbox was quiet, indicating muted panic among long-term holders. He concluded that the flash crash would have “no lasting consequence” for bitcoin’s trajectory, with underlying drivers like regulatory progress and institutional adoption still intact.
Short-term volatility expected
Hougan cautioned that volatility may persist in the near term as market makers and liquidity providers temporarily pull back.
He expects, however, that attention will return to bitcoin’s fundamentals, supporting continued market growth.
