The cryptocurrency market experienced a sudden and sharp downturn on September 7, with total market capitalization plunging by as much as 25.8% at its lowest point. Major exchanges reported service delays, and key players in the industry—from analysts to venture capital firms—shared their perspectives on the event. While the crash triggered widespread liquidations, some prominent voices in the space saw it not as a catastrophe, but as a necessary correction and even a strategic opportunity.
👉 Discover how top traders interpret market dips and turn volatility into opportunity.
Market Plunge: Bitcoin and Ethereum Hit Hard
Bitcoin dropped to a low of $42,830 during the flash crash before recovering to around $47,190 by the time of writing. Ethereum also felt the pressure, falling to $3,009 before rebounding to approximately $3,500.
Nearly all top ten cryptocurrencies by market cap saw declines exceeding 10%. Notably, BNB, XRP, DOGE, DOT, UNI, and LINK each suffered losses greater than 15%, reflecting broad-based selling across the altcoin sector.
Despite the turbulence, Solana (SOL) continued to demonstrate resilience. After hitting a recent all-time high, SOL bounced back strongly from its lows, surging over 40% in recovery. At one point, it briefly overtook XRP to become the sixth-largest cryptocurrency by market cap. As of now, SOL remains just 10.8% away from retesting its peak—an impressive performance amid widespread panic.
Exchange Disruptions Amid Spike in Trading Volume
As trading volume spiked during the crash, several major platforms struggled to maintain stability. Coinbase, Kraken, and Gemini all reported issues including delayed withdrawals and temporary trading halts. According to public status updates, most of these problems were resolved shortly after prices bottomed out.
Coinbase’s stock also reflected the turmoil, dropping 4.1% in after-hours trading. Meanwhile, users in Taiwan reported Binance experiencing outages, though the exchange did not issue an official statement.
Sam Bankman-Fried (SBF), CEO of FTX, noted that his platform had rate-limited a large number of users to manage load but confirmed that core systems—including matching engines, risk engines, GUIs, and mobile apps—remained fully operational.
Data from analytics platforms Bybt and The Block revealed that Bybit recorded the highest liquidation volume during the crash, particularly between 10:20 PM and 11:20 PM UTC on September 7.
👉 See how leading exchanges manage volatility and protect user assets during extreme market moves.
Larry Cermak: A “Perfect” Deleveraging Event
Larry Cermak, research director at The Block, described the crash as a “perfect” and “healthy” deleveraging—a stark contrast to previous market corrections he labeled “unhealthy.” He emphasized that altcoin funding rates leading up to the crash were excessively high, indicating overleveraged long positions across derivatives markets.
In response to suggestions for improving market transparency, Cermak acknowledged the difficulty in obtaining average leverage data directly from exchanges, which are unlikely to disclose such metrics publicly. However, he proposed a practical alternative: monitoring the ratio of liquidation volume to total open interest as a potential early warning indicator for excessive leverage.
This metric could help investors gauge systemic risk and anticipate future volatility—especially in fast-moving crypto markets where margin trading is prevalent.
Alameda’s Take: Buy the Dip
Sam Trabucco, CEO of Alameda Research, echoed a more opportunistic view. In a widely shared tweet thread, he compared the September 7 drop to past Bitcoin corrections from higher levels—such as when BTC fell from $60,000 earlier in the year.
Trabucco highlighted three key observations in the days leading up to the crash:
- Widespread premium pricing across crypto assets
- Rapid growth in open interest, especially in perpetual futures contracts
- These trends occurred during a period of sustained price appreciation
While he admitted the pullback came faster than expected—and that the initial decline should not have triggered such massive liquidations—he viewed the sharp drop as a classic buying opportunity.
“Buying into this kind of dip is ideal,” Trabucco stated. “The rationale is the same as before: longs are being forcibly exited, but no one genuinely wants to sell at $42,000.”
He added that although this event has unique characteristics, it follows a familiar pattern seen throughout crypto history—and likely won’t be the last.
👉 Learn how institutional traders identify high-conviction buying opportunities after market crashes.
Frequently Asked Questions (FAQ)
Q: What caused the September 7 crypto market crash?
A: The exact trigger remains unclear, but contributing factors include high leverage in derivatives markets, elevated funding rates for altcoins, and sudden profit-taking after a strong upward trend. The combination led to cascading liquidations and panic selling.
Q: Is deleveraging good for the crypto market?
A: Yes—when managed organically. Healthy deleveraging removes excess speculation and resets unsustainable positions without collapsing core confidence. It strengthens market fundamentals over time by reducing systemic risk.
Q: Why did exchanges experience outages?
A: Sudden spikes in trading activity overwhelmed system capacities. High-frequency trading bots, margin liquidations, and user logins surged simultaneously, creating latency or downtime on some platforms until traffic normalized.
Q: Was Solana’s performance during the crash significant?
A: Absolutely. Its strong rebound—up over 40% from lows—and brief overtake of XRP signal growing investor confidence in SOL despite volatility. This resilience highlights its maturing position in the top-tier crypto ecosystem.
Q: Should retail investors buy during crashes like this?
A: Only with caution. While dips offer entry points, they carry risks. Investors should assess their risk tolerance, avoid over-leveraging, and consider dollar-cost averaging rather than timing the bottom.
Q: How can I monitor leverage levels across exchanges?
A: While direct leverage data is limited, tools like open interest trends, funding rates, and liquidation volume ratios (e.g., liquidations vs. open interest) can serve as proxies for market heat and potential instability.
Core Keywords:
- crypto market crash
- healthy deleveraging
- buy the dip
- Solana price surge
- exchange outages
- funding rate spike
- liquidation volume
- Bitcoin correction
The September 7 selloff was more than just a price drop—it was a stress test for infrastructure, sentiment, and trading strategies. For institutions like Alameda and analysts like Larry Cermak, it wasn't a failure but a recalibration. As leverage unwinds and sentiment stabilizes, markets often emerge stronger—ready for the next leg up.