Bitcoin News Today: High Leverage, Low Liquidity: The Fatal Combo Behind $19B Crypto Crash

The cryptocurrency market experienced its largest liquidation event in history on October 10–11, 2025, with over $19.1 billion in leveraged positions wiped out amid heightened trade tensions between the U.S. and China. The sell-off was triggered by President Donald Trump's announcement of 100% tariffs on Chinese imports, which reignited fears of a trade war and sent global financial markets into turmoil Coindesk^[1]. Bitcoin, the largest cryptocurrency by market capitalization, dropped nearly 10% in a 24-hour period, while Ethereum fell 14% and Solana lost almost 20% of its value Fortune^[2]. The total crypto market cap plummeted by approximately $400 billion, reaching $3.74 trillion from a peak of $4.15 trillion Cryptotimes^[3].

The liquidation event was unprecedented in scale, surpassing previous crises such as the 2020 COVID-19 crash ($1.2 billion) and the 2022 FTX collapse ($1.6 billion) Coin360^[4]. Over 1.6 million traders saw their positions forcibly closed, with more than $7 billion in liquidations occurring within a single hour CCN^[5]. Altcoins were particularly hard-hit, with some losing over 99% of their value before partial recovery. XRP, DOGE, and other smaller tokens faced flash crashes, while stablecoins like Ethena's USDe briefly depegged from the dollar The Economic Times^[6].

Binance, the world's largest exchange, reported that its systems remained stable during the volatility but acknowledged temporary depegging issues and technical glitches CCN^[7]. The exchange distributed $283 million in compensation for affected users, attributing the crash to broader market conditions rather than platform-specific failures CCN^[7]. Other platforms, including Hyperliquid, recorded $10.28 billion in liquidations, highlighting the widespread impact across both centralized and decentralized markets Cryptotimes^[3].

Analysts attributed the crash to a combination of extreme leverage, low liquidity, and sudden geopolitical shocks. Vincent Liu of Kronos Research noted that "the tariffs were the spark, but leverage was the gasoline" Cryptotimes^[3]. The U.S. government shutdown further exacerbated uncertainty by delaying key economic data releases, leaving traders without critical indicators during the crisis Coindesk^[1].

The event exposed systemic vulnerabilities in the crypto ecosystem, including opaque liquidation data, reliance on price oracles, and the risks of high-leverage trading. Jeff Yan of Hyperliquid called for greater transparency from exchanges, while DeFi researcher Omer Goldberg highlighted weaknesses in decentralized finance protocols Cryptotimes^[3].

Bitcoin and Ethereum showed signs of recovery by late October 12, with Bitcoin rebounding to $115,000 and Ethereum near $4,130 Fortune^[2]. However, the emotional and financial toll on traders remained significant, with reports of widespread panic and long-term psychological impacts Cryptotimes^[3].