The Epic Revelation of Liquidation in the Crypto World: Reverence for the Market

October 11, 2025

From now on, the crypto world will add ‘1011’ to the special days like ‘519’, ‘312’, and ‘94’. Although some rejoice and others worry, from the data, today is a heavy day for most. The total liquidation reached 19.1 billion USD, affecting over 1.6 million accounts. I previously set the threshold for liquidations during a bull market at 10 billion RMB, and 19.1 billion USD far exceeds this number. Both the force of liquidation on leverage and the amount of liquidation have reached historical highs, and the scale also far surpasses ‘519’ and ‘312’. If it’s a shoddy bull position, or the multiple of borrowed leverage, it almost liquidates at 2 times, with some even as low as 1.5 times leverage. In other words, basically everyone who went long in this wave is gone, and in fact, over 16 billion out of the 19.1 billion liquidation were long positions.

Personally, I didn’t have many long positions in altcoins, so I didn’t face systemic liquidation. However, some of my previous arbitrage positions turned into naked holdings due to objective reasons, resulting in significant losses. Altcoins are really tough; it's truly tragic. Many people have suffered heavy losses this time. If your account unfortunately faced losses, I can only say don’t despair, there are still opportunities to recover in the crypto space. However, risk control must always be the most important thing to keep in mind. I often tell everyone not to casually leverage, and that’s the reason. The volatility in the crypto space is much higher than in other financial markets.

Of course, this wave of extreme market conditions still presents opportunities to make money, mainly by participating in market liquidation. The most classic examples are WBETH, BNSOL, and USDE. The first two are PoS-staked wrapped tokens, and their value peg to the local currency is fixed. Therefore, when both drop more than 80%, those who boldly buy in made a fortune. I've seen many sharing their experiences, and looking at the K-line trading volume, there is a potential arbitrage space of several tens of millions, meaning if you happen to see it, you can buy ETH for 500 dollars and SOL for over 60 dollars. As for USDE, it fell below 0.65 at its lowest, meaning you can buy the dollar stablecoin at a 30-40% discount. Currently, the above three have basically returned to their pegs. Unfortunately, I was busy closing some hedged long positions and didn't see it.

The trigger for this drop was Trump suddenly waving the tariff stick again, causing a crash in US stocks, which in turn affected the crypto space. However, such a drastic drop was completely caused by a lack of liquidity leading to a chain liquidation, with countless collateral ruthlessly thrown onto the market, crashing the cryptocurrency prices. Especially after the order book was breached, market makers were temporarily unable to place orders, causing prices to fall further. Having been in the crypto space for so long, I had not only not experienced such a drop but also found it hard to imagine such a crash would occur. So, market black swans are far from something one can predict purely based on experience; maintaining a sense of awe is the right approach.

As for the market situation after this drop, it is certain that at least for the next month, it will be a recovery phase, and a short-term oversold rebound is not ruled out. Therefore, if you want to buy the dip, besides being prepared for the long term, you can also place orders in advance to sell during possible rebound scenarios. Based on experience, if there is no second crash tomorrow, an oversold rebound will occur, followed by another drop, and then a long recovery phase will begin. As for whether the market will be bullish or bearish after a month, it’s hard to tell; I’m still in a daze myself.

Best wishes.#1011