Here's What Happened in the October 2025 Crypto Market Crash
Between October 10 and 12, 2025, the crypto market experienced one of its toughest weekends ever. Prices of major coins fell sharply, and over $19 billion in leveraged positions were wiped out in a single day, the biggest liquidation event in crypto history.
The crash was triggered by a surprise U.S. tariff announcement on Chinese imports, which shook global markets. Crypto reacted first and fastest. But what made the crash so severe was the amount of leverage in the system. The market was stretched, so a single shock triggered a chain of forced liquidations.
The panic didn’t last long. U.S. officials softened their stance on tariffs, calming investors. Prices began to recover, and analysts believe this reset cleared excess leverage, setting up a healthier market for the months ahead.
What Triggered the Crash
The downturn started late Friday, October 10, when President Donald Trump announced 100% tariffs on Chinese tech imports. Markets went into panic. Crypto, which trades 24/7 without circuit breakers, reacted within minutes as bots triggered large sell orders.
The “Power Hour” Sell-Off
In one intense hour, more than $7 billion in leveraged positions were liquidated. Within 24 hours, that number grew past $19 billion. About 1.6 million traders were affected. Exchanges activated emergency tools to contain losses. Bitcoin alone saw $3.7 billion in long positions wiped out.
How the Market Moved
The wipeout hit assets differently:
- Bitcoin fell 8.4% to about $104,782
- Ethereum dropped 5.8% to $3,637
- BNB slid 6.6% to $1,094
- XRP plunged nearly 23% to $2.33
- Tether held steady at $1
The gap between Bitcoin’s drop and XRP’s plunge showed how traders moved into more stable assets under stress. DeFi lending pools also saw liquidations as collateral values sank.
Why the Market Was So Fragile
In the months before the crash, leverage had surged across significant assets:
- Ether’s open interest rose from $23 billion in January to $60 billion by October 9.
- Bitcoin’s climbed 374% in the same period.
- Solana grew 205%.
This meant the market was primed for a sharp drop. Once prices dipped, automatic liquidations kicked in, accelerating the fall.
Global Markets Added Pressure
The tariff news hit global markets, too. On that Friday, the S&P 500 fell over 2% and the US Tech 100 dropped 3.68%. Bond yields rose, the dollar strengthened, and both stocks and crypto sold off. ETF outflows had already thinned liquidity, so when retail panic set in, prices sank further.
DeFi and Stablecoins Showed Cracks
DeFi protocols faced hidden risks. As collateral fell, liquidation mechanisms struggled to keep up, leaving some protocols with bad debt.
Stablecoins also came under stress. Ethena’s USDe plunged to $0.66, while USDC briefly lost its peg. Tether traded at a slight premium as traders fled to the most trusted stablecoin. Binance later compensated $283 million to affected users, showing how fragile some stablecoins can be during fast crashes.
The $88 Million Trade That Raised Eyebrows
Minutes before the U.S. tariff announcement, a single trader opened a massive Bitcoin short position, then closed it shortly after for an estimated $88 million profit. The timing was so precise that many in the industry suspected insider information or front-running. Even if the trade was a lucky guess, the optics were terrible. It sparked public calls for an investigation and showed how crypto markets lack the kind of surveillance you’d see in traditional finance. Regulators like the SEC and CFTC closely monitor insider trading in stock markets.
Regulation Was Improving, But Gaps Remained
The U.S. had started making progress on stablecoin regulation with the GENIUS Act, signed in July 2025. It required dollar-backed stablecoins to hold full reserves, a move aimed at avoiding another Terra-style collapse. But the Act didn’t address leverage limits or derivatives risks, the very things that fueled this crash. Broader reforms to the crypto market structure were stuck in Congress. Talks between Democrats and Republicans stalled just before the liquidation event, leaving significant gaps in systemic risk management and market surveillance. The crash made those gaps clear. While stablecoin rules improved, the lack of comprehensive leverage regulation allowed structural weaknesses to build unchecked.
Market Rebound and What Lies Ahead
The panic eased as fast as it started. Over the weekend, Trump softened his stance, signalling that the tariffs were a negotiating tactic. Markets calmed, and crypto prices bounced back.
Leverage Flush
Funding rates dropped to their lowest since 2022, clearing billions in speculative positions. This left the market leaner and stronger. Bitcoin even flashed a “golden cross” shortly after, hinting at bullish momentum.
Long-Term Bullish Outlook
Despite the chaos, major institutions held their price targets. SkyBridge still expects Bitcoin at $150,000 by year-end, and Ark Invest projects a $25 trillion total crypto market cap by 2030. For many experts, the crash was a necessary reset, not a change in the long-term story.
