Last weekend, the cryptocurrency market experienced an unprecedented "Black Friday" nightmare. In just 24 hours, a staggering $19 billion to $20 billion in long positions were forcibly liquidated, marking the largest single-day deleveraging event on record. This sudden "bloodbath" not only caused severe market turbulence but also triggered a wave of panic. However, just as the market was generally worried about the arrival of a bear market, U.S. President Trump's "reversal" remarks unexpectedly injected a dose of adrenaline into the crypto market, leading to a rapid V-shaped rebound in mainstream assets like Bitcoin and Ethereum. What exactly ignited this epic liquidation? After such a massive shock, where will the market head next?
- Black Friday: A $20 Billion Liquidation Storm Sweeps the Crypto Market
On October 10, the cryptocurrency market faced the most severe single-day deleveraging event since its inception.
The scale of liquidation was astonishing: Approximately $19 billion to $20 billion in cryptocurrency long positions were forcibly liquidated within 24 hours, resulting in about $65 billion in open interest (OI) vanishing across various exchanges, resetting positions to levels seen in July.
Altcoins were hit hardest: In this liquidation storm, altcoins bore the brunt of the selling pressure, with prices plummeting significantly. In contrast, Bitcoin's decline was relatively limited, demonstrating its stronger market resilience.
Major liquidation platforms: Liquidation was primarily concentrated on overseas platforms, with Hyperliquid handling over $10 billion in funds, while Bybit also absorbed a significant amount of liquidation. Binance's share of liquidation in this event was relatively small. Notably, CME maintained a large proportion of Bitcoin futures OI during the sell-off, with Coinglass data showing that CME, Binance, Bybit, and OKX were nominally among the top Bitcoin futures venues.
- Trump's "TACO Trade": An Unexpected Catalyst and Market Reversal
The trigger for this epic liquidation event was surprisingly U.S. President Trump's earlier hardline remarks on tariffs against China, followed by a dramatic "reversal."
Policy "blunder" causes a massive shock: On October 9, news about China's rare earth export controls was released, and Trump posted a comment a day later, threatening to "significantly increase" tariffs on China. The market's overreaction to this "non-news event" led to widespread panic selling.
"TACO trade" saves the market: However, just as the market fell into panic, Trump suddenly made mild remarks, emphasizing that the U.S. wants to help China rather than harm it, and that both sides do not wish to fall into recession. This unexpected policy turnaround was interpreted by the market as a classic "TACO" (Trump Always Chickens Out) trading strategy—initially demanding sky-high prices, then backing down to reach an agreement.
Crypto market V-shaped reversal: Trump's latest statements quickly alleviated alarms in the U.S. and Chinese stock markets and directly triggered a strong rebound in the cryptocurrency market. Bitcoin rose above $115,000, having previously dipped to $102,000; Ethereum climbed above $4,150, after falling to $3,435. The total market capitalization of cryptocurrencies rebounded above $400 billion, with a 24-hour increase of 5.6%.
- Market Resilience and Capital Flows: Bitcoin's "Safe Haven" Effect
Despite experiencing extremely negative events, Bitcoin was only down 8% from its historical high of $126,000, demonstrating strong resilience.
Capital and basis compression: Between October 10 and 11, the perpetual swap financing rates for major currency pairs turned negative or approached zero. Glassnode pointed out that total financing was at its lowest level since the 2022 bear market, confirming the thorough completion of deleveraging.
Dramatic reversal of altcoins: The reversal of altcoin perpetual contracts was even more pronounced. On October 11, Solana's 8-hour financing rate fluctuated around -0.23%, a rare and widespread "long squeeze" pattern, indicating a shift from crowded long positions to defensive positions.
ETF inflow dynamics: Farside Investors reported that net inflows into U.S. spot Bitcoin ETFs were substantial earlier in the week, then gradually decreased during the crash, and slightly turned negative on October 10. On the day of the crash, IBIT inflows dropped to $74.2 million, while inflows from other issuers turned negative, resulting in a net outflow of $4.5 million that day, ending a streak of nine consecutive days of net inflows.
Comparison with Luna's collapse: On-chain data analyst Murphy compared the October 11 crash with the previous Luna collapse entering a deep bear market. He noted that during this crash, there was no significant influx to Binance; instead, an average of 5,338 BTC was still being withdrawn daily, indicating that non-ETF over-the-counter demand did not decrease under the impact of the sudden event, and investors maintained confidence in Bitcoin around $110,000. This suggests that, unlike the collapse during the Luna incident where investor confidence shattered and panic selling ensued, in this crash, large holders chose to continue accumulating BTC rather than cutting losses.
- The Market After Deleveraging: Challenges and Opportunities Coexist
Deleveraging operations cleared $65 billion in speculative positions from the system in a single trading day.
Market adjustment: This event signals that the market will undergo a significant adjustment. Following the market crash, forced selling of stocks decreased, the foundation was gently rebuilt, and capital returned to a neutral level, indicating that the market has shed the fragility seen a week prior.
Volatility of altcoins: Before the rebuilding of leverage and market makers expand their participation again, the volatility of altcoins may still be higher than that of Bitcoin.
Liquidity gap: Pressure concentrated in the thinnest parts of the order book. Some altcoins saw prices drop to near-zero levels on certain exchanges due to leveraged liquidation pullbacks, creating temporary voids in specific currency pairs. Bitcoin was able to stabilize more quickly due to benefiting from a deeper order book and a growing group of ETF buyers.
The ongoing appeal of ETFs: Although Friday's tariff announcement offset the bullish momentum of the week, digital asset investment products still recorded record inflows. For the week ending October 10, 2025, the weekly net inflow of digital asset investment products was $3.17 billion, bringing the year-to-date inflow to a record $48.7 billion. Inflows into Bitcoin products reached $2.67 billion, bringing the year-to-date inflow to a historic high of $30.2 billion.
Conclusion:
The "Black Friday" liquidation event in the cryptocurrency market over the weekend was a severe shock influenced by macroeconomic and geopolitical factors. Trump's "TACO trade" unexpectedly ignited a V-shaped rebound in the market, highlighting the crypto market's sensitivity to external events. Despite experiencing an epic liquidation, Bitcoin's resilience, the continued inflow of institutional capital, and the healthy adjustments following market deleveraging all suggest that the Web3 market is poised for a rebirth. However, investors must remain vigilant about market volatility and invest rationally to navigate this digital financial transformation filled with challenges and opportunities.
Related Reading: Forbes Exclusive Reveals: Trump is the Behind-the-Scenes Big Player in Bitcoin, Holding $870 Million in BTC
Original article: “A Look Back at the $20B Liquidation Wave on 'Black Friday' in Cryptocurrency”
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