In 2025, forced liquidations in the crypto derivatives market totaled around $150 billion, according to CoinGlass. While this figure seems alarming at first glance, it largely reflects routine risk management rather than systemic collapse. The total crypto derivatives turnover for the year reached approximately $85.7 trillion, highlighting that liquidations are a structural feature of a derivatives-dominated market.

The October crash was triggered by a macro shock: President Donald Trump’s announcement of 100% tariffs on Chinese imports and potential export controls caused global risk assets to drop sharply. In crypto, long and leveraged positions were forced into liquidation as margin thresholds were breached. From October 10–11 alone, over $19 billion in positions were liquidated, predominantly bullish trades.

Auto-deleveraging (ADL) intensified the impact, especially in thinly traded mid-cap and long-tail markets, turning intended hedges into realized losses. Bitcoin and Ethereum dropped 10–15%, while many smaller tokens lost 50–80% of their perpetual contract value. Market concentration on a few major exchanges amplified the forced selling, straining infrastructure and cross-exchange strategies.

The episode demonstrates that in a derivatives-driven market, “liquidation tax” is not merely a penalty for over-leverage—it is a structural mechanism that can amplify stress under hostile macro conditions. Despite the turmoil, the system continued functioning, with reduced open interest and repriced risk, highlighting the limits of leverage and concentrated market infrastructure.