Author: Deep Tide TechFlow
Yesterday's Market Dynamics
US Government Officially Enters Partial Shutdown
According to Jinshi Data, the US government officially entered a partial shutdown in the early hours of the 31st local time. Previously, the US Senate passed a spending bill to fund most federal government departments and submitted it to the House of Representatives for consideration. However, since House members were not in Washington and would not return until Monday (February 2nd), the Senate vote could not prevent a partial government shutdown.
Fed Chair Nominee Warsh Reportedly Involved in Epstein Case
According to Yahoo Finance, Kevin Warsh, nominated by US President Trump to serve as Federal Reserve Chair, had his name appear in the latest Epstein case documents released by the US government on Friday. The documents show Warsh's name was listed on the email guest list for the "2010 St. Barts Christmas" event, which also included figures like Russian oligarch Roman Abramovich; additionally, he attended a dinner hosted by British aristocrat William Astor. This news broke on the same day Warsh was nominated for Fed Chair. His main controversy previously was his relationship with Republican donor Ronald Lauder, who was accused of influencing Trump's interest in Greenland during his first term and holding business interests there. Warsh may now need to address his relationship with Epstein and his 2010 Christmas itinerary, with outside attention also focused on whether Trump's nomination is related to them belonging to the same social circle.
Binance Releases Detailed Investigation Report on October 11th Crypto Market Flash Crash: Isolated Issues on Binance Platform Not the Cause of the Flash Crash
Binance released a detailed investigation report on the October 11th crypto market flash crash. Key points are as follows:
- The main drivers of the market turmoil on October 11, 2025, included macroeconomic shocks, risk control mechanisms of market makers, and Ethereum network congestion.
- During the market volatility, Binance's core systems remained fully functional without any overall platform outages. All core matching, risk checks, and liquidation functions continued to operate stably without interruption.
- Binance is committed to maintaining transparency and protecting user interests. It has proactively taken multiple measures to support users affected by the extreme market volatility.
Binance stated that it needs to be specifically clarified that isolated issues on the Binance platform were not the cause of this flash crash. The three widely mentioned token depeggings (USDe, BNSOL, WBETH) occurred at 05:36 (UTC+8), later than the most volatile market window (05:10–05:20 UTC+8), and approximately 75% of the liquidations on that day had already occurred before these three tokens depegged. This sequence indicates that most deleveraging happened during the initial macro shock around 04:50 (UTC+8), when forced liquidations accelerated price declines amid rapidly thinning order book liquidity.
This further confirms that the primary drivers of this event were market-wide risk aversion and liquidation-induced chain reactions, not isolated platform anomalies. Throughout the process, Binance's core matching engine, risk check, and liquidation systems remained stable and operational without interruption.
Below are the investigation results for two specific incidents:
Incident One: Asset Transfer Subsystem Performance Degradation (05:18–05:51 UTC+8)
During the peak of the sell-off, our internal asset transfer subsystem experienced approximately 33 minutes of slowed operation, affecting some users' fund transfers between spot accounts, wealth management accounts, and futures accounts. During this time, core matching, risk checks, and liquidation functions remained fully operational. The impact was limited to the fund transfer path and its dependent services. A very small number of users briefly saw their interface balance display as "0" when backend calls failed; this was a display issue, not an actual loss of assets.
Incident Two: USDe, WBETH, and BNSOL Index Deviation (05:36–06:15 UTC+8)
Against the backdrop of generally decreased order book depth across the market and cross-platform arbitrage being hindered by on-chain congestion, the USDe index first showed abnormal deviation, followed by similar situations with WBETH and BNSOL. Localized liquidity shortages, accelerated liquidations, and slowed cross-market fund flows amplified short-term price volatility in this platform's index calculation.
OKX Star: October 11th Crypto Flash Crash Caused by Binance's Irresponsible USDe Yield Activities
OKX CEO Star posted on X platform, stating, "The October 10th incident was caused by irresponsible marketing activities by certain companies. Tens of billions of dollars were liquidated. Many industry participants believe this damage is more severe than the FTX collapse. The root cause is not hard to identify.
What actually happened
- Binance launched a temporary user yield activity offering 12% APY on USDe, while allowing USDe to be used as collateral with the same treatment as USDT and USDC, without effective limits.
- Binance users were encouraged to convert USDT and USDC to USDe for substantial yields, but potential risks were inadequately emphasized. From the user's perspective, trading with USDe was no different from using traditional stablecoins—while the actual risk profile was significantly higher.
- Risk escalated further as users took the following actions: • Converted USDT/USDC to USDe • Used USDe as collateral to borrow USDT • Converted the borrowed USDT to USDe again • And repeated this cycle
- This leverage cycle generated artificial APYs of 24%, 36%, or even 70%+, widely perceived as 'low risk' simply because they were offered by a major platform. Systemic risk accumulated rapidly in the global crypto market.
- By that point, even a small market shock was enough to trigger a collapse. When volatility hit, USDe quickly depegged. Chain liquidations followed, and risk management weaknesses around assets like WETH and BNSOL further amplified the crash. Some tokens traded near zero at one point. Losses for global users and companies (including OKX customers) were severe, and recovery will take time."
Wintermute Founder: October 11th Crypto Flash Crash Clearly Not a "Software Glitch", Irrational to Place All Blame on One Exchange
Wintermute Founder and CEO Evgeny Gaevoy posted on social media, expressing hope that public figures would choose their words more carefully. The 10/10 crash was clearly not a "software glitch" but a flash crash in a large, leveraged market with insufficient liquidity on a Friday evening, influenced by macroeconomic news.
Since we're on the topic, I understand no one likes being in a bear market, watching all asset classes except cryptocurrencies rise. Finding a scapegoat is comfortable, but placing all the blame on one exchange is logically dishonest.
Dragonfly Partner: Completely Blaming Binance's USDe Yield Activity for the 10.11 Crash is Unreasonable
Dragonfly Managing Partner Haseeb Qureshi offered his analysis of the October 11th crypto market crash. He found OKX CEO Star's attribution of the crash to excessive leverage from Binance's Ethena yield activity involving USDe to be unreasonable.
Qureshi pointed out that Bitcoin's price had already bottomed 30 minutes before USDe's price was affected, and the USDe price deviation only occurred on the Binance platform, while the liquidation storm swept across all exchanges. Qureshi believes the true causes of the 10.11 crash were: market panic triggered by Trump's tariff threats, price dislocation and massive liquidations caused by a Binance API outage, market makers' inability to balance inventory across exchanges, and the lack of self-stabilizing mechanisms in cryptocurrency liquidation processes, all acting together.
Tom Lee: Current Bear Market Triggered by Chain Liquidations from a Pricing Glitch on a Certain CEX Last October
Tom Lee, speaking on the podcast "The Compound" this Friday, stated that the current bear market was triggered by the largest deleveraging event in crypto history (larger than the FTX collapse) last October: a pricing glitch on a trading platform triggered chain automatic liquidations, over 2 million global accounts were liquidated, 1/3 of market makers were destroyed, exchange balance sheets were severely hit, causing the entire ecosystem to "limp".
Additionally, he maintained a bullish stance, expecting the 2026 market trend to be similar to 2025: strong growth in the first half, a possible ~20% correction around mid-year, followed by a rebound of at least 10%.
Trend Research Deposits Another 30,000 ETH to Binance to Repay Loan, Approximately $70.18 Million
According to monitoring by Onchain Lens(@OnchainLens), Trend Research further deposited 30,000 ETH (approx. $70.18 million) to Binance, which were subsequently sold to repay a loan. In the past 18 hours, Trend Research has deposited a total of 40,000 ETH (approx. $94.53 million) to Binance.
Market News: UAE Royal Family Member Secretly Acquires 49% Stake in World Liberty Financial for $500 Million
According to market news, a senior member of the UAE royal family secretly purchased a 49% stake in Trump's cryptocurrency project, World Liberty Financial, for $500 million.
Michael Saylor Again Posts Bitcoin Tracker Information, May Disclose Accumulation Data Next Week
MicroStrategy founder Michael Saylor again posted information related to the Bitcoin Tracker, writing: "More Orange".
Based on previous patterns, MicroStrategy always discloses Bitcoin accumulation information the day after related messages are posted.
Tokens Like HYPE, BERA, XDC to See Large Unlocks This Week, Total Value Exceeds $300 Million
Data from Token Unlocks shows that several cryptocurrency projects will undergo token unlocks this week, with a total value exceeding $300 million.
- HYPE will unlock 9.92 million tokens on February 6th, worth approximately $296.91 million, representing 2.79% of circulating supply;
- BERA will unlock 63.75 million tokens on February 6th, worth approximately $29.47 million, representing 41.70% of circulating supply;
- XDC will unlock 841.18 million tokens on February 5th, worth approximately $29 million, representing 5.00% of circulating supply;
- ENA will unlock 40.63 million tokens on February 2nd, worth approximately $5.55 million, representing 0.55% of circulating supply;
- KMNO will unlock 100 million tokens on February 8th, worth approximately $3.34 million, representing 1.55% of circulating supply.
- W will unlock 50.41 million tokens on February 6th, worth approximately $1.15 million, representing 0.95% of circulating supply;
- RED will unlock 5.54 million tokens on February 6th, worth approximately $1.15 million, representing 2.24% of circulating supply;
- AXS will unlock 652.5 thousand tokens on February 6th, worth approximately $1.12 million, representing 0.24% of circulating supply;
- BB will unlock 29.93 million tokens on February 7th, worth approximately $1.07 million, representing 2.97% of circulating supply;
Market Dynamics
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