Financial markets witnessed unprecedented chaos on October 10, 2025, when President Trump’s announcement triggered the largest crypto liquidation on record. Within hours post-announcement, the market lost over $19 billion in leveraged positions, altering market dynamics, investor confidence, and exposing potential critical vulnerabilities in trading infrastructure.
As liquidation events have happened in the past, it wasn’t always clear whether it was due to investor panic or de-risking. Now, however, a single post announcing 100% tariffs on Chinese imports triggered a cascading event that disrupted the market.
Billions in longs evaporated in minutes
On October 10, over $19 billion in leveraged trading was wiped out. Out of the $19 billion, approximately $16 billion were longs, with at least a 2x leverage. Surprisingly, it was the number of traders with no stop loss limits who helped trigger the cascading events. The market-wide wipeout was approximately nine times higher than any previous liquidation, as Bitcoin dropped by 14%, from $122,000 to below $105,000.
Altcoins saw similar drawdowns, as Solana lost over 40%, whereas Toncoin traded as low as 80% from its high, at $0.50. Some smaller altcoins like ATOM printed near-zero prices amid a complete liquidity collapse. At the same time, larger crypto-backed assets like BNB saw a lower drawdown and a higher recovery.
The sell-off began after 10:30 PM CET on October 10, and within 25 minutes, non-BTC and non-ETH crypto prices sank approximately 33%. During the peak panic between 9:00 and 10:00 PM, roughly $7 billion in positions were liquidated in under one hour.
Data behind the liquidation cascade
The forced liquidation event underlined how extreme leverage buildup leads to a market crash. CoinGlass data underlines how 1.6 million trader accounts were liquidated across both centralized and decentralized exchanges. Approximately 87% of all liquidated positions were longs, indicating how market makers might have synchronized their exit and profit-taking with the tariff announcement.
Market depth data reveals how quickly liquidity vanished. One major token saw its market depth plummet from $1.2 million to just $27,000, resulting in a 98% liquidity collapse in just 40 minutes. The single largest known liquidation was a $200 million long position in ETH on Hyperliquid that was erased instantaneously. Binance alone used approximately $188 million to cover bad debt from the event.
A look at forced liquidations
Exchange risk management systems activated multiple layers of protection during the crisis. When traditional liquidation mechanisms proved insufficient, several trading platforms deployed auto-deleveraging (ADL) systems as the final level in a liquidation process.
ADLs are systems similar to circuit-breakers in the stock market. In crypto, however, they automatically close winning positions once the losing side exhausts all collateral and splits losses among profitable traders. One exchange data point emphasized that over 50,000 short positions were liquidated, totaling $1.1 billion. This demonstrates how even profitable positions that could generate more profits weren’t immune to forced closure.
Market makers on the crypto market, however, implemented emergency protocols, temporarily halting operations to avoid amplifying volatility. Their delta-neutral hedging strategies, designed to maintain no directional price exposure, required rapid position adjustments as correlations broke down across assets.
Data behind the market’s new structural reality
The forced liquidation event fundamentally changed the market structure. On-chain data shows that open interest across the entire market decreased by approximately 50% within a few hours, representing a massive deleveraging that reduced systemic risk but also market liquidity.
Messari Research emphasized that the fact that market makers paused operations resulted in “tremendously less liquidity in the order books,” making prices more volatile. Market makers took out all the liquidity during periods of increased panic. They withdrew the last line of defense at $108,000, leading to a low near $104,000. Within 35 minutes of the worst selling, bid-ask depth on mainstream centralized exchanges recovered to over 90% of pre-event levels.
This recovery, however, suggests market-making algorithms adapted quickly to new price levels. However, the temporary liquidity vacuum allowed for extreme price dislocations that wouldn’t occur in deeper markets.
What exchange flows are telling us
Current market data shows Bitcoin trading at $106,953—approximately 11% lower than the previous week and nearly 8% below month-ago levels. These sustained lower prices suggest the liquidation event created lasting changes in market positioning rather than a temporary disruption.
Exchange flow patterns indicate continued caution among leveraged traders. The dramatic reduction in open interest suggests many participants are rebuilding positions, as low to medium-sized BTC wallets have started to accumulate more conservatively. The coordination between tariff announcements and crypto market movements reveals how digital assets have become increasingly correlated with traditional risk-off sentiment.
Lessons for strategic investors
The forced liquidation shows how quickly leverage can cause panic in the markets. Volatility, however, is part of crypto markets, and investors should understand the importance of position sizing and deleveraging since any policy or geopolitical change can significantly affect their positions.
The fact that 87% of liquidations were long positions suggests dangerous consensus positioning that left the market vulnerable to any negative catalyst.If you are new to crypto or want to diversify without having to learn how to trade or navigate the complex crypto market, Yieldfund provides three investment plans that can generate up to 60% interest with weekly payouts in USDC.
