Arthur Hayes Links Altcoin Price Decline to CEX Liquidations

Arthur Hayes, co-founder of BitMEX, attributed the sharp altcoin price declines in October 2023 to automated liquidation mechanisms on large centralized exchanges, amplifying volatility.

This highlights the complex dynamics of cryptocurrency markets, impacting investor sentiment and challenging the recovery potential for affected assets.

BitMEX’s Hayes Identifies CEX Liquidations Behind Altcoin Drop

Arthur Hayes from BitMEX stated that the significant decline in altcoin prices was primarily caused by the automated liquidation of collateral on large CEXs. Blockage of limit orders caused liquidation engines to remain active, leading to accelerated price drops.

Immediate market implications include challenges for altcoins to regain previous price levels quickly. Hayes noted that many high-quality altcoins will find it difficult to recover in the short term due to these market dynamics.

Market reactions were mixed, with industry players understanding the structural issues within CEX liquidation processes. Hayes’ statement emphasized the need for careful risk management, especially for tokens with thin liquidity.

“There have been three cycles where the all-time high occurred every four years. Traders apply this rule without understanding why it worked in the past. And without this historical understanding, they miss why it will fail this time.” – Arthur Hayes, Co-founder, BitMEX

Historical Parallels Highlight Risks in Automated Liquidation Processes

Did you know? In past market corrections, such as 2018 and 2022, similar cascading liquidation events also caused extended price depressions, showing the impact of liquidation engines on market stability.

Bitcoin (BTC), trading at $112,230.69 as of October 11, 2025, holds a market cap of $2.24 trillion with a 59.89% market dominance, according to CoinMarketCap. Recent activities saw a 7.53% 24-hour drop, with volume at $174.39 billion. BTC’s circulating supply is nearly 19.93 million against a max of 21 million.

Experts from Coincu Research suggest potential regulatory scrutiny could focus on the systems governing automated liquidations. Market volatility impacts might push for improvements in risk management protocols, highlighting the necessity of enhancing liquidity conditions and trading infrastructure on platforms. SEC crypto regulation plans are likely to consider these areas.