On October 10, 2025 (Friday), the largest liquidation event in the history of the cryptocurrency market occurred, with a total liquidation amount exceeding 10 billion USD (approximately 70 billion RMB), primarily taking place in leveraged trading of mainstream assets such as Bitcoin (BTC) and Ethereum (ETH). This crash led to a temporary evaporation of hundreds of billions of USD in total market capitalization, affecting hundreds of thousands of traders. Among them, approximately 95% of the liquidations were long positions that were forcibly closed, highlighting the risks of high-leverage trading. The event was referred to by several data platforms (such as Coinglass) as "the largest liquidation wave in cryptocurrency history."
Cause: The core trigger of Donald Trump's social media post is a post he made on X (formerly Twitter) regarding the deterioration of US-China relations and potential trade retaliation measures. Key points include:
US-China relations have deteriorated to the point of 'no need for a meeting'.
The US will retaliate through financial and trade means.
Upgrading tariffs under the pretext of 'China's rare earth monopoly' (implying an additional 100% tariff and software export controls).
This post was published around October 10 in the afternoon Eastern Time, quickly triggering global market panic. Trump's remarks were seen as geopolitical signals, amplifying concerns about US-China trade frictions, leading to a collective sell-off of risk assets (such as cryptocurrencies). Meanwhile, the Nasdaq index plunged 3.56% (a rare occurrence in many years), the dollar index fell by 0.57%, oil prices dropped by 4%, and prices of commodities like copper also retreated, with the overall market shifting to a risk-averse mode. The crypto market reacted with a lag of about 30-60 minutes (possibly due to delays in market maker risk control systems), after which Bitcoin fell from about $98,000 to $92,000 (a decline of 5.47%), with Ethereum and others dropping over 10%.
This directly triggered a chain liquidation of leveraged positions: price drop → insufficient margin → automatic liquidation → further selling pressure → more liquidations, forming a vicious cycle. The chain reaction process
Initial market shock: After Trump's post was published, US stocks crashed first (the Nasdaq dropped 3.56%), and the crypto market followed with a delay. Leveraged traders (especially retail and high-leverage accounts) were hit hardest, with a surge in liquidation volumes on CEX platforms such as Binance, OKX, and Bybit.
Liquidation amplification effect:
▪ Scale: Over $10 billion in liquidations within 24 hours, with BTC accounting for $5.65 billion (longs $4.17 billion, shorts $1.45 billion) and ETH accounting for $1.7 billion. Over 700,000 traders were affected.Platform performance:
CEX: Binance and others handled the situation smoothly, but high-leverage arbitrage programs faced severe liquidations (those with high leverage faced significant losses, while those with low leverage profited greatly).
DEX: Aster and Lighter experienced withdrawal delays, while dYdX was nearly paralyzed; Hyperliquid performed best with smooth withdrawals, its HLP treasury (Hyperliquid Liquidity Provider) yielding a 40% surge (from $80 million to $120 million), essentially 'absorbing' retail liquidation positions.
Arbitrage opportunity: Large funds utilized USDC price fluctuations (returning after decoupling during panic) for risk-free arbitrage of tens of millions of dollars.
Wider impact:
The overall crypto market cap fell below $4 trillion, with altcoins (such as SOL, DOGE, XRP) dropping 10-20%.
ETF capital outflow: Bitcoin and Ethereum spot ETFs saw net outflows of billions of dollars, with institutional investors exiting.
De-leveraging: This liquidation has cleared high-risk positions. Market volatility may continue in the short term but has also created opportunities for new entrants.
Why does a 'chain reaction' occur?
Leverage mechanism: The high leverage in the crypto derivatives market amplifies volatility. A 5% price drop can trigger long liquidations, further selling pressure lowers prices.
Liquidity fragility: In extreme market conditions, market makers and DEX systems are overloaded, leading to delays and withdrawal issues.
Macroeconomic background: Combined with the 'sell the fact' effect after the Federal Reserve's September rate cut, geopolitical tensions, and weak economic data, risk appetite has plummeted.
Historical comparison: The scale exceeds the $1.6 billion collapse of FTX in 2022 and the pandemic flash crash in 2020. This event resembles the 2022 Terra/Luna incident but is triggered more 'suddenly'.