The 1011 Settlement Event Revelation: The crypto market urgently needs systemic rules

Author: Lucas Kiely

Compiled by: Felix, PANews

The biggest problem with cryptocurrencies is the lack of the quantifiable value that traditional stocks have, making it purely speculative. In addition, investors can leverage trades in some way, and the market can lose billions of dollars overnight.

Industry stalwarts behind blockchain technology believe that its innovative infrastructure gives it value. However, there is little evidence to suggest that this can bring real, tangible benefits to token holders.

Professional investors from the traditional finance sector often find it difficult to adapt to this situation. For tokens, there are no price-earnings ratios to refer to, no supply chains to trace, and in fact, there is nothing tangible at all. This is precisely what makes cryptocurrencies unique compared to all other asset classes: they are completely driven by sentiment—and often sentiment that is extremely difficult to predict.

Cryptocurrency is a true reflection of the forces of a free market. Bitcoin may be the only exception, as it has a limited supply and its ownership is increasingly dominated by complex institutional investors. However, the rise and fall of most cryptocurrencies is extremely difficult to predict, primarily driven by traders.

confidence, channels, and infinite leverage

Some might say that the valuations of many stocks are not based on actual value either. Indeed, the valuations of tech stocks like Apple, Meta, and Nvidia have been high for a long time. However, in addition to the high price tags, these companies still have some fundamentals to rely on: earnings, cash flow, supply chain, and products. Most digital assets do not.

At the same time, cryptocurrencies can bring life-changing returns, and it is indeed possible to achieve them. Seeing these success stories permanently recorded on the blockchain and widely shared on social media platforms means that no investor can ignore this market, which has now reached a scale of $4.3 trillion. However, in this largely unregulated crypto world, investors often behave irrationally and make significant mistakes.

This type of error often manifests in the form of leverage. Of course, leverage is not a new concept in the investment field. Retail investors can also use leverage in traditional finance, but this is regulated. For example, the Financial Industry Regulatory Authority (FINRA) stipulates that the leverage limit for retail margin accounts on stocks is 2:1; forex leverage trading can only be conducted through professional platforms and is subject to strict upper limits; while derivatives are primarily aimed at qualified investors.

House of Cards

At the same time, any investor in the crypto space can easily trade with 100 times leverage or even higher on exchanges. Today, this issue is more severe than ever—because the world's largest institutions are now also involved in the crypto space. This situation of no leverage limits has led to chain liquidations, often causing the market to evaporate billions of dollars within hours or even minutes.

Recall the large-scale liquidation events at the end of September and the beginning of October 2025. In the liquidation event at the end of September, over $1.8 billion in leveraged positions were wiped out, while in the early October liquidation event, over $19 billion in positions were liquidated in just a few hours. Although there are many theories about the true cause behind the early October liquidation event, it is evident that when market sentiment reverses, leveraged long positions fall into a chain liquidation dilemma.

Some savvy traders have undoubtedly profited from this volatility. However, most investors have been stopped out before they even had a chance to log into their trading accounts. In the crypto space, the losses caused by these mistakes are much more severe than in traditional finance, as there are almost no rules here. When the market direction reverses, these positions collapse like a house of cards, wiping out billions of dollars.

smarter and faster

Cryptocurrency is constantly evolving. Nowadays, some of the world's most well-known asset management companies are involved, and the regulatory environment is becoming more favorable. However, it still lacks the kind of protective measures that can instantly prevent major market events from occurring.

This is largely related to the unrestricted use of leverage, unrealistic expectations, and the entry of institutions that can shake the market with a single transaction. Every investor must start taking the market more seriously. Those who made millions in Bitcoin are lucky, but there are many more who have lost money in altcoins like Dogecoin than there are those who have made a profit.

Today, as the industry matures, with giants looming, overconfidence and excessive leverage have become significant risks facing the cryptocurrency industry. Every investor needs to adopt a more systematic approach to address this reality.

Related Reading: The “Green Book” of Crypto Trading: The Market “Truth” That Must Be Recognized