After just surviving the historically sluggish September, the crypto market was expected to welcome a long-awaited respite and rise in October. However, on Saturday (October 11), it faced a "bloodbath." Cryptocurrency prices plummeted, and many positions were liquidated, causing numerous investors to lose their principal overnight.
According to CoinGlass data, approximately $19.311 billion in forced liquidations occurred in the global cryptocurrency market within the 24 hours leading up to 2 PM on October 11, with about $16.817 billion coming from long positions, affecting over 1.6 million traders. Coinglass stated on X that the actual numbers could be higher as exchanges do not necessarily report liquidation orders in real-time.
The forced liquidation amount for Bitcoin (BTC) reached $5.363 billion, while Ethereum (ETH) saw $4.427 billion. Additionally, the forced liquidation amounts for Solana (SOL) and Ripple (XRP) were $2.013 billion and $708 million, respectively.
In terms of price, Bitcoin briefly fell below the $110,000 mark, hitting a low of $105,930, marking the lowest point in nearly three months, before slightly recovering to around $113,000. Ethereum's price dropped to around $3,340, a decline of over 17%. Solana experienced an even more severe drop, falling over 30% to around $150. XRP faced a "flash crash," plummeting 42% from $2.82 to $1.64, marking the largest single-day drop in recent years.
The cryptocurrency fear and greed index, which measures overall market sentiment, fell to a low of 27 on Saturday, and as of the time of writing, it has rebounded to around 35, but still remains in the "fear" zone. The last time this index fell to the 20s was six months ago when Bitcoin also sharply declined due to trade tensions, briefly touching around $77,000.
The straw that broke the market's back on Saturday was the renewed tariff threats from U.S. President Trump, who announced an additional 100% tariff on Chinese imports, raising the total tariff on China to 130%. He also implemented new export controls on key software. The U.S. retaliated against China due to recent restrictions imposed by China on U.S. access to rare earth resources, which are critical raw materials for technology and manufacturing.
Trump wrote on Truth Social: "Ultimately, while this may be painful, it will be very beneficial for the U.S. in the long run. One of the policies we are currently considering is to significantly increase tariffs on Chinese goods entering the U.S. At the same time, many other countermeasures are also being seriously considered."
This is not the first time Trump's tariff war has impacted the market. In April of this year, Trump imposed large-scale "Liberation Day" tariffs on 185 countries, applying a baseline tariff of 10% on all U.S. imports and imposing up to 54% "reciprocal tariffs" on certain countries with significant trade deficits. This led to a drop of over $5 trillion in the S&P 500 index, marking the largest decline in history, surpassing the crash triggered by the pandemic in March 2020. Bitcoin also evaporated 5% on April 6, marking the largest single-day drop since the beginning of the year.
In recent months, the crypto market has been in a phase of "false prosperity"—with loose capital, high sentiment, and record-high leverage. According to CryptoQuant data, the average leverage ratio for Bitcoin trading on major exchanges surpassed the historical high of 0.27 at the beginning of October, with some platforms' contract positions nearing the peak levels of the 2021 bull market. This means that the market only needed an external shock to trigger a chain liquidation.
Among these, the stablecoin USDe issued by Ethena is also considered a "risk amplifier" in this round of market collapse.
USDe's design relies on an ETH derivatives hedging mechanism, maintaining its peg with a "delta-neutral" strategy, but its core driving force for rapid ecosystem expansion comes from looping lending. In recent months, a large number of users have used lending protocols like Aave and Morpho to collateralize their USDe to borrow stablecoins, then re-exchange the borrowed assets back into USDe for secondary collateralization, thereby stacking yields. According to DeFiLlama data, the total value locked (TVL) in the Ethena protocol surpassed $2.8 billion at the beginning of October, a significant portion of which came from such looping strategies. To encourage user participation, the official also offered liquidity subsidies of up to 12%, further accelerating the expansion of looping lending.
However, this "yield stacking" essentially constitutes an on-chain leverage spiral: once market prices fluctuate sharply, ETH hedging positions become unbalanced, or USDe experiences a slight de-pegging, it triggers a decline in collateral value, leading to forced liquidations. On Saturday, USDe's price briefly fell below $0.99 in some trading pairs, even touching $0.65 on certain platforms. This de-pegging quickly transmitted to lending protocols, causing liquidity withdrawal and large-scale redemptions.
Coincidentally, this crash occurred on Friday night in U.S. time and early Saturday morning in Asia, catching market makers on both sides off guard as it fell outside their regular working hours.
Amid extreme panic, there are also potential opportunities. Currently, 45% of predictors on Myriad Markets are bullish on Bitcoin, believing it could rise to $140,000.
CZ also retweeted the views of Quinten, co-founder of weRate: "During the COVID crash, $1.2 billion was liquidated; during the FTX crash, $1.6 billion was liquidated; today, $19.31 billion was liquidated. People hope to buy in during this crash, just as they did during the COVID crash."
Kyle, a researcher at DeFiance Capital, pointed out that this crypto market crash is comparable to the FTX and Celsius collapses, marking a "cycle-ending event." He believes that while it may not be the so-called "best bottom-buying opportunity" yet, it is definitely a time when investors "should start bottom-fishing." The current market has released extreme panic and is gradually building a bottom, although prices may still have some room to drop. From a long-term perspective, we are closer to the market bottom than the top, making asset selection particularly critical. Kyle also mentioned that many altcoins may never recover from this crash.
Brian Strugats, chief trader at Multicoin Capital, stated: "The focus now is on counterparty risk exposure and whether this will trigger a broader market chain reaction."
The epic liquidation that the crypto market faced on Saturday saw a single-day liquidation of up to $19.3 billion. The combination of Trump's tariff shock, high leverage, and liquidity mismatch triggered a panic sell-off. Nevertheless, the extreme drop has also released opportunities for positioning, but investors still need to be cautious, paying attention to asset selection and counterparty risk—picking up gold from the ashes requires a discerning eye.
Related: SEC Chairman pushes for "future protection" regulatory policies, laying the groundwork for the crypto industry's freedom after Trump's departure.
Original article: “External shocks and internal chains spark historic crypto market liquidation”
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