#$2TWipedOutHedgeFundsFaceLiquidation
Thursday’s market crash was more than just a bad day for technology stocks. It exposed how quickly crowded trades and excessive leverage can turn a correction into a much bigger problem.
The Nasdaq Composite fell 5.5% on November 5, wiping approximately $2.5 trillion from its market value. At the same time, hedge funds faced heavy pressure. Tech-focused long-short funds lost more than 4% that day, erasing much of their gains for 2026.
The pressure is also visible in crypto. More than $1 billion in crypto derivatives positions were liquidated over a 24-hour period, with leveraged long positions taking most of the damage.
Why does this matter? When borrowed positions move against investors, margin calls can force them to sell. That selling pushes prices lower and can trigger further liquidations.
Walleye Capital has announced plans to reduce its equity business, cut part of its investment team and return some capital. This is a risk-reduction move, not confirmation that the fund is being liquidated.
My view: The next important signal is whether selling pressure and forced liquidations begin to ease. Until then, managing leverage and protecting capital matter more than chasing a quick recovery.
Do you think this is a temporary market reset, or could forced selling create another major wave of volatility?