OpinionMarkets
|5 min ReadWintermute CEO: Crypto Needs Circuit Breakers After $20B Meltdown
Lucca Menezes
Senior Analyst
Published
Jan 16, 2026
One Hour of Chaos
On October 11, crypto faced a record-breaking collapse. Nearly $20 billion in leveraged positions were liquidated within an hour — the largest wipeout in digital asset history.
Evgeny Gaevoy, founder and CEO of Wintermute, one of the industry’s biggest market makers, joined The Block’s podcast days later to dissect what happened. He called it “a completely disordered hour.”
Gaevoy said the crash appeared to start with a wave of Trump-related headlines that triggered a cascade of forced liquidations across major exchanges. “It wasn’t just retail traders. Even professional market makers were frozen out. The system broke,” he said.
He added that during the crash, cross-platform transfers and hedging failed. “People say market makers withdrew liquidity. The truth is, we simply couldn’t move assets at all,” Gaevoy explained. “You might be long on Binance, short on Coinbase — and both sides freeze.”
The ADL Nightmare
Much of the confusion came from ADL, or Auto-Deleveraging, a mechanism exchanges use as a last resort to stabilize markets when insurance funds are depleted.
“In theory, ADL is elegant,” Gaevoy said. “But when it’s triggered without transparency, chaos follows.”
He described trades being force-closed at nonsensical prices. “We saw ADL executions where the market was at 5. There’s no hedging that. You just take the hit.”
Gaevoy called for clearer disclosure from exchanges on how ADL prices are determined. “If some players are exempt — like certain institutional desks — that must be public,” he said. “Otherwise, it breeds conspiracy theories.”
Time for Circuit Breakers
Asked how the system could improve, Gaevoy argued that crypto markets should adopt circuit breakers, similar to those used in traditional finance.
“Every major stock exchange — NASDAQ, CME, NYSE — has mechanisms to halt trading when prices crash too fast,” he said. “In crypto, there’s nothing like that.”
He suggested exchanges pause trading or switch to auction mode when stablecoins depeg or major tokens crash beyond thresholds. “If Bitcoin drops 20 percent in minutes, that’s an anomaly, not a change in fundamentals. A short halt can save retail traders from getting wiped out,” he said.
However, he noted the challenge: circuit breakers only work if exchanges coordinate. “If Coinbase halts and Binance doesn’t, price discovery keeps happening elsewhere,” he said. “To work, it has to be industry-wide.”
Technical Weakness, Not Conspiracy
Gaevoy dismissed the idea that exchanges intentionally “go offline” during crashes. “Most of them just have terrible infrastructure,” he said. “They’re nowhere near the level of traditional financial exchanges.”
He argued downtime usually stems from technical overload, not manipulation. “It’s bad business to kill your customers. Exchanges and market makers make more when traders stay active, not when they’re wiped out.”
Limited Contagion, Stronger Majors
Despite the record liquidation, Gaevoy said contagion risk is limited. “In 2022, everything was interconnected. Now the web is thinner. One firm’s failure doesn’t drag down ten others.”
He also said altcoins bore the brunt of the damage. “Bitcoin, Ethereum, and Solana held up well. Altcoins and meme tokens got crushed,” he said. “So no, we’re not entering another alt season anytime soon.”
Liquidity, he added, is consolidating into the majors. “BTC, ETH, SOL — that’s where the institutions are. ETFs, futures, infrastructure — it’s becoming a safe zone.”
A Market Maker’s Lessons
Wintermute survived the chaos. “We lost on ADL, but we also made on volatility,” Gaevoy said. “Overall, we came out fine.”
He admitted that black swan events happen rarely, making it inefficient to build entire systems around them. “You can’t design a perfect system for one night every two years,” he said.
Internally, Wintermute plans to recalibrate its own risk systems. “Our internal circuit breakers were firing nonstop,” Gaevoy said. “Next time, we’ll make them less aggressive.”
“We’re Always Net Long”
Addressing online rumors that Wintermute caused the crash, Gaevoy was blunt. “People see one data point and assume we dumped,” he said. “It’s stupid. We’re mostly long. We hold BTC, ETH, SOL, HYPE — why would we dump our own bags?”
He said most of their capital is diversified across multiple venues. “We never keep more than 35 percent of assets on one exchange. Even if Binance goes down, we survive.”
Asked about the FUD, Gaevoy shrugged. “Retail traders love to blame someone,” he said. “They scream on X; we profit from their bad trades. It’s an ecosystem. Sad, but true.”
No Altcoin Boom Ahead
Looking ahead, Gaevoy expects a quieter period. “Majors will keep absorbing liquidity. Bitcoin and Ethereum are too institutional now to collapse,” he said. “Unless something insane happens — like a quantum computing attack — they’re safe.”
As for the rest of the market, he sees little room for wild rebounds. “Retail’s money is cautious now. There won’t be a big altcoin season anytime soon. But the next bull run will be built on stronger foundations — and hopefully, with circuit breakers in place.”
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.