October Liquidation Shock Exposes Systemic Vulnerabilities

The market endured severe stress tests in 2025, with forced liquidations totaling an estimated $150 billion for the year. The most significant event occurred in early October when President Donald Trump announced 100% tariffs on Chinese imports, triggering a cascade of liquidations exceeding $19 billion over 48 hours. Approximately 85-90% of liquidations came from long positions, wiping out traders betting on higher prices.

"Extreme events that erupted during 2025 imposed stress tests of unprecedented scale on existing margin mechanisms, liquidation rules, and cross-platform risk transmission pathways," according to the CoinGlass report.

Global crypto derivatives open interest fluctuated dramatically, reaching a record $235.9 billion on October 7 before the tariff-driven selloff erased more than $70 billion in positions. Year-end open interest of $145.1 billion still marked a 17% increase from the start of 2025.

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