Cathie Wood: $28 Billion Bitcoin Deleveraging Drove Recent Pullback

ARK Invest CEO Cathie Wood has attributed Bitcoin’s recent drawdown to a large-scale deleveraging event instead of a deterioration in fundamentals. Wood said a $28 billion deleveraging event, triggered by a Binance software glitch in October, created heavy selling pressure across the market.

Wood’s comments point to a familiar dynamic in Bitcoin market structure. Where sharp price corrections are often driven by internal market mechanics instead of changes in long-term adoption trends.

Additionally, large concentrations of leverage can amplify moves in both directions. When those positions unwind quickly, price action can deteriorate even as broader fundamentals remain intact.

Once this excess leverage is flushed out, volatility usually compresses. Then, price behavior becomes more stable, allowing the markets to reset.

Cathie Wood Links Bitcoin Selloff to One-Off Deleveraging Event

During the interview, Wood explained that Bitcoin’s pullback wasn’t driven by weakening demand or macro deterioration, but by forced selling linked to excessive leverage.

Furthermore, she pointed to a Binance-related software glitch on October 10 that caused large-scale liquidations. Which then cascaded through derivatives markets and increased downside moves.

Wood emphasized that deleveraging events of this scale tend to be self-limiting. Once positions are flushed and leverage resets, selling pressure typically ends. Therefore, allowing price to stabilize even in the absence of immediate bullish catalysts.

Based on this assessment, Wood said Bitcoin is now likely to trade within a broad $80,000 to $90,000 range as the market digests the move.

What This Could Mean for Bitcoin’s Cycle

Wood’s comments reinforce a recurring pattern in Bitcoin market structure. Sharp corrections often happen due to leverage imbalances and not changes in long-term adoption or network fundamentals.

Therefore, if selling pressure is indeed exhausted, consolidation could act as a reset. Moreover, sideways price action that comes after deleveraging events usually precedes renewed trend development.

However, analysts argue this can only happen once liquidity conditions improve and risk appetite returns.

More broadly, the episode highlights how market plumbing still plays a decisive role in short-term price behavior. Indeed, even as institutional participation grows, Bitcoin remains sensitive to leverage concentration and technical failures within exchange infrastructure.

Lastly, Wood’s assessment suggests the recent drawdown may mark the end of a mechanical adjustment phase. Leaving Bitcoin positioned to complete the latter stages of its current cycle.

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