Ethereum Leads Recovery After $20 Billion Liquidation Shock

Good morning Asia. This is what is making news in the markets:

Welcome to Asia Morning Briefing, a daily summary of top news during US time and an overview of market movements and analysis. For a detailed overview of the US markets, see CoinDesk’s Crypto Daybook Americas.

Bitcoin is trading at $115,157, steady after a volatile weekend that began with the largest cryptocurrency liquidation event in history, while Ether rose to $4,146, extending its recovery from Friday’s lows near $3,700.

Elsewhere, Solana gained 11% to $196, Bittensor rose 28% and Cronos jumped 11%, according to market data from CoinDesk, as capital rotated back into high-beta assets following a $20 billion leverage increase. Both Washington and Beijing worked to cool trade tensions over the weekend, helping the recovery.

Bitwise’s Jonathan Man points to positioning as the key factor: leverage spread to long-tail tokens, so when liquidity disappeared, the demise was severe, but it cleared the way for a faster restart.

Betting also played a secondary role in cushioning the decline. With nearly 30% of the ETH supply locked in validators, but only a quarter circulating as liquid derivatives, the network structure created frictions that slowed panic selling. Even when the derivatives were settled, validation capital remained, mitigating what could have been a full liquidity spiral.

But as the post-mortems come in, many fingers are pointing at Binance.

Dragonfly’s Haseeb Qureshi questions whether Ethena was actually unbundled, arguing that instead $60 to $90 million in USDe, along with wBETH and BNSOL, were dumped on Binance, exploiting a pricing flaw that priced collateral using Binance’s own order book instead of external oracles.

According to the thesis, as Binance’s infrastructure collapsed under heavy load, market makers were unable to hedge or rebalance positions, causing the assets involved to decouple from their underlying prices and deepen the liquidation.

The localized collapse took USDe to $0.65 on Binance alone, while it remained near $1 on Curve and Bybit. Because Binance’s unified margin system marked a guarantee for its internal prices, the crash instantly wiped out hundreds of millions in margin value, leading to forced liquidations of all assets.

Ethena’s USDe protocol remained fully collateralized and redeemable at all times, suggesting that the chaos was a failure on the exchange side, not a disconnection from the stablecoin.

Binance has since acknowledged “platform-related issues,” moved to Oracle-based collateral pricing, and promised compensation for affected traders.

In retrospect, Friday’s crash looks less like a stablecoin panic and more like a master class in how to exploit an exchange’s weakest structural link.

In a post on Binance added that more than $280 million in compensation has already been paid to affected users and reaffirmed that it will not cover ordinary market losses.

For now, the crypto cleanup has given way to a measured rebound, led by assets that fell the hardest and reset the deepest.

Market movement

BTC: Bitcoin stabilized around $115,000 after falling nearly 9% on Friday and recovering about 4% over the weekend as traders unwound short positions and broader risk sentiment began to stabilize.

ETH: Ether recovered to around $4,150 after falling nearly 17% on Friday, recovering faster than Bitcoin as leveraged positions cleared and DeFi activity picked up.

Gold: Gold rose to a record $4,059.87 per ounce in early Asian trading on Monday, as rising trade tensions between the United States and China, renewed geopolitical risks and expectations of Federal Reserve rate cuts fueled demand for safe-haven assets.

Elsewhere in Crypto:

• Aster Airdrop Delayed Due to ‘Data Inconsistencies’ with Token Allocations (Decrypt)
• Tokenization Company Securitize Said to be in Talks with Cantor SPAC (Bloomberg)
• Bank of America, Goldman Sachs and other big banks ‘jointly exploring’ a stablecoin (The Block)