Crypto derivatives just went through a stress test that even veterans call historic. In a new long-form analysis, Bitcoin.com describes the Oct. 10–11 tariff shock as a “leverage tinderbox,” where record open interest met U.S.–China tensions and produced the largest liquidation event the market has seen so far. Coinglass data shows exchanges liquidated about $19.1 billion in leveraged positions over 24 hours, wiping out roughly 1.6 million accounts as bitcoin, ether and major altcoins snapped lower.([news.bitcoin.com](https://news.bitcoin.com/the-leverage-tinderbox-how-geopolitics-and-open-interest-fueled-the-largest-wipeouts-ever/))
Two months later, bitcoin trades near $87,300, around 31% below its early October all-time high near $126,000, with ether around $2,930 and solana near $122. Price action recovered from the tariff shock, but positioning, risk limits and options pricing still carry its fingerprints.([coinmarketcap.com](https://coinmarketcap.com/currencies/bitcoin/))
How tariffs turned a crowded trade into forced selling
On the evening of October 10, President Donald Trump announced plans for a 100% tariff on Chinese imports and new export controls on “critical software,” in response to Beijing’s fresh curbs on rare-earth exports.([apnews.com](https://apnews.com/article/cc47e258cfc6336dfddcc20fa67a3642)) Global risk assets sold off within minutes. U.S. equity futures slumped, and crypto mirrored the move in real time as weekend liquidity thinned out.
By late Friday, bitcoin had dropped more than 14% intraday to lows around $104,000 to $105,000 before stabilizing near the $112,000 area. Ether slid about 12%, and large altcoins like solana, XRP and dogecoin printed 20% to 40% drawdowns on some venues as order books gapped.([reuters.com](https://www.reuters.com/world/asia-pacific/after-record-crypto-crash-rush-hedge-against-another-freefall-2025-10-13/))
Coinglass: largest liquidation event in crypto history
Coinglass, which tracks derivatives across major centralized exchanges, flagged the session as the largest liquidation event in crypto history. Its cross-venue tally shows exchanges force-closed about $19.13 billion in positions over 24 hours and liquidated 1,618,240 trader accounts.([u.today](https://u.today/shiba-inu-burn-rate-crashes-99-as-crypto-sees-largest-liquidation-event-ever))
“In the past 24 hours, exchanges liquidated 1,618,240 traders for a total of $19.13 billion,” Coinglass wrote on X on October 10, calling it “the largest liquidation event in crypto history” and warning that Binance’s reporting limits likely push the figure higher.
Post-mortems that stitched together exchange-level feeds put the split at roughly $16.7 billion in long positions and $2.4 to $2.5 billion in shorts.([coindoo.com](https://coindoo.com/crypto-market-records-largest-single-day-liquidation-event-in-history/)) Bitcoin accounted for roughly $5.4 billion of the flush, ether for about $4.4 billion, with solana near $2.0 billion and XRP around $700 million.([xt.com](https://www.xt.com/en/blog/post/trumps-100-china-tariff-triggers-20b-wipeout-1-6m-crypto-traders-liquidated)) The single largest liquidation hit Hyperliquid’s ETH‑USDT book, where one position worth about $203 million blew out in a single shot.([coindoo.com](https://coindoo.com/crypto-market-records-largest-single-day-liquidation-event-in-history/))
Record open interest turned a macro shock into a margin grinder
The headline landed at a time when speculative exposure already sat near the redline. A Coinglass newsletter written during the move counted $9.55 billion of open interest erased as roughly 1.5 million traders lost positions, even before final totals climbed past $19 billion.([coinglass.com](https://www.coinglass.com/news/721208))
In a separate research note, CoinDesk Research calculated that perpetual futures open interest dropped 43% to about $123 billion after the crash, led by a 57% reset on Hyperliquid.([coindesk.com](https://www.coindesk.com/research/market-spotlight-the-19-billion-liquidation-that-shook-crypto)) By simple arithmetic, that contraction implies pre-crash perps exposure around $215 billion, almost entirely concentrated on a handful of venues and a weekend liquidity window.
Venture investors who spoke to The Block via Coinglass’s newswire pointed at positioning, not geopolitics alone, as the main problem. Dragonfly general partner Rob Hadick noted that open interest sat at record highs going into the week, which meant “more money that could be liquidated” once the tariff headline hit.([coinglass.com](https://www.coinglass.com/news/727188))
That mix of crowded longs, rich funding and thin books turned a macro shock into a margin grinder. As prices slipped through intraday support, liquidations knocked bids away, funding flipped negative and basis compressed. Each forced closure pushed price lower and dragged more accounts into margin calls.
What broke and what held
The stress test did not create the kind of CeFi meltdown that followed FTX. Spot and derivatives venues such as Binance, Coinbase and Kraken stayed online and cleared the forced selling without halting markets, according to Yellow.com’s tariff crash report and other recaps.([yellow.com](https://yellow.com/research/trump-100-china-tariff-how-one-announcement-liquidated-dollar19-billion-in-crypto)) Fiat-backed majors such as USDT and USDC held their dollar pegs, while newer designs like Ethena’s USDe briefly traded as low as $0.65 on Binance during the worst of the move.([coindesk.com](https://www.coindesk.com/research/market-spotlight-the-19-billion-liquidation-that-shook-crypto))
DeFi lending protocols including Aave, MakerDAO and Compound absorbed the volatility without visible bad-debt buildup, according to the same Yellow.com postmortem, even as collateral values whipsawed.([yellow.com](https://yellow.com/research/trump-100-china-tariff-how-one-announcement-liquidated-dollar19-billion-in-crypto)) The real structural fragility sat in derivatives. CoinDesk estimates that average token declines across its coverage universe reached about 47%, worse than the May 2021 washout around 41%, despite a much larger spot market.([coindesk.com](https://www.coindesk.com/research/market-spotlight-the-19-billion-liquidation-that-shook-crypto))
Two months on, the tape still trades with scars
By late December, spot prices look calmer. Bitcoin trades around $87,300, up modestly on the day but still far below its October 6 peak near $126,200.([coingecko.com](https://www.coingecko.com/en/coins/bitcoin)) Ether changes hands just under $2,930, while solana hovers near $122 after a strong run earlier in the year.([coinmarketcap.com](https://coinmarketcap.com/currencies/ethereum/))
Derivatives metrics show less drama but not full amnesia. Coinglass tallies more than $150 billion in liquidations across 2025, with the October 10 event towering over a long tail of smaller flushes.([yellow.com](https://yellow.com/news/crypto-liquidations-surpass-dollar150-billion-in-2025-coinglass-reports)) A Reuters review of options flow after the crash found heavy demand for downside protection, with traders loading up on out-of-the-money puts on both BTC and ETH.([reuters.com](https://www.reuters.com/world/asia-pacific/after-record-crypto-crash-rush-hedge-against-another-freefall-2025-10-13/))
Macro risk also has not gone away. The same tariff and export-control track that sparked October’s rout still hangs over global trade discussions, with U.S. officials weighing extra curbs on China-linked exports that rely on American software.([reuters.com](https://www.reuters.com/world/us/us-considering-curbs-exports-china-made-with-us-software-sources-say-2025-10-22/))
The result is a market that trades with less blind faith in perpetual funding and more respect for macro headlines. Open interest has rebuilt, but every new OI high now carries a data point from October 10, when geopolitics met crowded leverage and $19 billion vanished in a single day.([businessinsider.com](https://www.businessinsider.com/crypto-market-meltdown-erased-1-trillion-bitcoin-btc-digital-assets-2025-11))
