‘This Felt Different’: Why Friday’s Crypto Crash Made History

It took eight years until Bitcoin hit $20,000 for the first time. But on October 10, the world’s biggest cryptocurrency dropped by $20,000 in a single day.

Friday’s crypto crash was nothing short of extraordinary. There’s little doubt that the pullback was partially triggered by Donald Trump imposing a new 100% tariff on Chinese goods — “over and above” any levy the country’s already paying.

Once again, the threat of an escalating trade war spooked markets, with the S&P 500 tumbling 2.7%. However, the impact across the crypto landscape was far more drastic, as the announcement coincided with low liquidity on Friday afternoons.

BTC flash-crashed to lows of $104,500 — diving to $102,000 on some exchanges. ETH’s decline was even more stomach-churning, with a peak-to-trough drop of 21% from $4,390 to $3,460.

In dollar terms, this is now being regarded as the largest liquidation event in crypto’s history: $19.36 billion in just 24 hours, according to Coinglass data. Long positions bore the brunt of this as traders chasing “Uptober” were punished.

The scars are still visible across altcoins too. Even though some assets have embarked on a slight rebound, many smaller cryptocurrencies are still nursing losses of more than 20%. And unsurprisingly, so-called “synthetic dollars” like USDe also lost their peg — plummeting to 65 cents on the dollar at some stage. We haven’t seen a correction like this in some time.

Moonrock Capital’s founder and managing partner Simon Dedic wrote on X that the pullback “felt very different” from previous crashes — and dismissed the idea it could have been caused by Trump’s tariff threats alone.

“It really feels like something went seriously wrong behind the scenes at Binance or a major market maker, triggering a one-of-a-kind liquidation cascade that wiped out liquidity across the board and sent some assets literally to zero.”

Dedic argued that the cause of this carnage “was a massive technical issue, not a fundamental one” — indicating problems with infrastructure were to blame, rather than a sudden loss of conviction in the value of Bitcoin.

Indeed, there’s no shortage of those on Crypto Twitter who are absolutely furious with Binance right now. Screenshots have emerged that show altcoin pairings with USDT plummeting by more than 90%. Those attempting to buy dips or panic sell faced agonizing delays, or were unable to complete their transactions.

Reports suggest there has also been a human cost to all of this. According to The Times of Ukraine, one influencer and entrepreneur shot himself in his Lamborghini — and had discussed financial stress in a video posted online. It serves as an important reminder to look after mental health during market turbulence, and never suffer in silence.

As you might expect, on-chain sleuths are now suggesting that substantial whales exacerbated the crash — including an old wallet that allegedly made more than $200 million of profits in a single day by shorting BTC and ETH. And given Donald Trump’s ties to the crypto sector are well documented, accusations of insider trading and market manipulation are now reverberating across social media. Those claims are unfounded, but it’s pretty unfortunate and coincidental that the dump coincided with reports that the president is considering whether to pardon CZ.

Despite Friday’s freefall, there are some who remain optimistic that this is just a temporary blip — a necessary purge of excess and greed before the markets advance higher as 2025 draws to a close. Some are calling for perspective given how Bitcoin has now returned to prices that were last seen at the end of September. Others insist that all of this drama hasn’t ended the bull run, but reignited it.

Bitwise’s senior investment strategist Juan Leon has shared an article he wrote last year, in which he argued that — historically at least — the best time to buy BTC is “when there’s blood in the streets.”

His research, which examined a 10-year period from January 2014 to August 2024, examined how major asset classes had performed one year after the S&P 500 had suffered a sudden pullback exceeding 2%. While this flagship index had typically rebounded by 23%, the data suggests BTC had usually jumped by a staggering 189%.

Crypto investors are feeling battered, bruised and full of fear. Newcomers, who up until a few days ago were intrigued by BTC after it scaled to record highs, will be feeling cautious once again. This was a crash like no other, and it might take a while for the market to get its breath back again.

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