Bitcoin News Today: Beyond the Tariffs: Crypto's $19B Crash Exposes Fragile Market Infrastructure

The cryptocurrency market experienced its largest liquidation event in history on October 10, 2025, as U.S. President Donald Trump announced a 100% tariff on Chinese imports and export controls on critical software. The move triggered a global sell-off, erasing over $19.16 billion in long positions within hours Coindesk^[1]. Bitcoin (BTC) plummeted from $122,000 to $102,000, while Ethereum (ETH) and altcoins saw losses of up to 99% in intraday wicks Yellow.com^[3]. Total crypto market capitalization fell to $3.74 trillion, down from $4.30 trillion the previous day .

The crash was fueled by a combination of geopolitical tensions and fragile market infrastructure. Trump's tariff announcement, framed as a response to China's export controls on rare earth materials, reignited trade war fears and triggered a risk-off sentiment. On-chain data revealed over 1.62 million traders were liquidated, with $16.81 billion in long positions and $2.5 billion in shorts wiped out BeInCrypto^[5]. The scale of the event dwarfed prior crashes: the $1.6 billion FTX collapse in 2022 and the $1.2 billion liquidations during the March 2020 pandemic-driven sell-off Coindesk^[1].

Technical vulnerabilities exacerbated the downturn. Thin order books on exchanges like Binance and Bybit collapsed under pressure, with Bitcoin's bid depth evaporating by 60% below $110,000 Yellow.com^[3]. Auto-deleveraging (ADL) protocols amplified the crisis, forcibly unwinding positions as liquidity vanished. Binance reported $4.44 billion in ETH liquidations alone, while Hyperliquid handled $70 million in liquidations without bankruptcies Yellow.com^[3]. Stablecoins also suffered: Ethena's USDe depegged to $0.62 amid collateral failures, and wrapped ETH (WBETH) broke pegs by 5% Yellow.com^[3].

Altcoins bore the brunt of the sell-off. Solana (SOL) dropped 25% to $168.79, XRP fell 2.67%, and meme tokens like PEPE lost 80%+ in "zero-bid" moments The Market Periodical^[2]. DeFi protocols faced $10 billion in forced sales, and total TVL declined 15% as leveraged synthetics unraveled Yellow.com^[3]. Exchange outages further worsened the crisis: Binance acknowledged "heavy market activity" causing system delays, while Coinbase and Robinhood reported similar issues . Critics accused Binance of market manipulation, citing frozen accounts and failed stop-loss orders during the crash .

Despite the severity, analysts view the event as a "controlled detonation" rather than a collapse. Bitcoin's 38% depeg in USDe and 5% break in WBETH signaled overleveraged positions being flushed out Yellow.com^[3]. Post-crash data showed Bitcoin clawing back to $112,000, with Ethereum hovering near $3,850. The Fear and Greed Index stabilized at 54, and RSI hit 28, indicating oversold conditions The Market Periodical^[2]. Institutional activity, including BlackRock's acquisition of 21,180 BTC amid the chaos, suggested potential for a V-shaped rebound Yellow.com^[3].

The crash exposed systemic weaknesses in crypto's derivatives dominance and reliance on algorithmic market makers. Wintermute and other AMMs withdrew liquidity, exacerbating order book imbalances Yellow.com^[3]. However, decentralized exchanges like Hyperliquid demonstrated resilience, handling liquidations without downtime Yellow.com^[3]. As markets stabilize, the event may reset volatility for the next bull cycle, provided infrastructure holds.