A market avalanche triggered by a 'single sentence'
Simply put, this incident is like a 'financial avalanche' occurring in the cryptocurrency world. The cause was a gunshot from the peak (macroeconomic level) (Trump's tariff remarks), which loosened the already unstable snow layer (high-leverage market structure), ultimately triggering a series of collapses and stampedes in the early morning hours (the worst liquidity period).
1. The gunshot from the peak: Trump ignites panic
Event: At 00:00 on October 11, Beijing time, Trump announced that he would impose 'super tariffs' on China, which could reignite the Sino-US trade war.
Market interpretation: Investors immediately worry that this will cause U.S. inflation to rise again, forcing the Federal Reserve to delay rate cuts or even raise rates again.
Immediate reaction: As the U.S. stock market had already closed, the 24-hour trading cryptocurrency market became the first place to vent panic, and prices began to fall.
In simple terms: A bad news arrives, everyone fears that this will affect the economy, and thus begins to sell high-risk assets, with cryptocurrencies being the first to bear the brunt.
2. Fragile foundation: The 'dangerous game' in the market.
Before the decline, many investors were playing a 'high-leverage arbitrage game', which is the core hidden danger of this avalanche. It mainly involves two types of assets:
Staked tokens with interest (like WBETH, BNSOL):
What is it: You stake your ETH, SOL, etc., and receive a token representing your staking rights (like WBETH). You can hold this token to earn about 3% staking rewards annually.
Player's play: Many people do not want to sell their coins, but need cash for other activities (like trading other coins). They use these interest-bearing WBETH as collateral to borrow money from platforms (like borrowing USDT).
Temptation point: Because WBETH itself has a 3% yield, the actual borrowing cost is very low (for example, borrowing interest 5.56% - 3% yield ≈ 2.56%), which is very cost-effective.
High-yield stablecoins (like USDe):
Use your existing USDe as collateral to borrow more money, and then buy USDe.
Or, use the borrowed money (like USDT) to exchange for USDe and earn the interest spread.
What is it: A stablecoin that can provide very high annualized returns (like 12%).
Player's play: To earn this 12% high yield, some people will play 'nested dolls':
In simple terms: Many people in the market use their 'yield-producing coins' as collateral to borrow money at low cost and then chase after high-yield products like USDe. This structure itself is very dependent on the stability of asset prices.
3. The chain of the avalanche: how the decline evolves into disaster.
When the gunfire on the mountaintop (tariff news) causes the market to start declining, a dangerous chain reaction begins:
Step one: BTC drops, dragging the entire scene. Bitcoin, as the market leader, will lead all cryptocurrencies to decline. This triggered a wave of sell-offs in the entire market.
Step two: Collateral devaluation triggers liquidation.
The value of the WBETH you have mortgaged is declining. For example, if you mortgaged $100,000 worth of WBETH and borrowed $78,000.
When the value of WBETH drops to about $85,700, the risk control system of the lending platform will forcefully sell your WBETH to recover the loan, which is called liquidation.
Key issue: WBETH is only traded on Binance, and the market depth is very shallow. Usually, buying and selling is not a problem, but if many people are liquidated at the same time, and everyone is frantically selling WBETH in the market, no one will be able to catch it.
Step three: vicious cycle and 'decoupling'.
Due to the crazy sell-off of WBETH, the price experienced a 'decoupling', plunging to only about 20% of the ETH price. This means that all high-leverage players were basically 'blood washed'.
To repay debts and close positions, these people had to sell their other assets, including the USDe they held for arbitrage.
Step four: USDe is affected, the second 'decoupling' occurs.
A large number of people simultaneously sell USDe for USDT or USDC, causing USDe trading pairs to lose liquidity.
In an instant, the huge selling pressure had no one to catch it, and the price of USDe could not hold up, plummeting from around $1 to $0.68.
Ultimately, the entire chain forms a death spiral: WBETH drops → sell USDe to repay debts → USDe decouples and drops → more collateralized USDe positions are liquidated → further selling of WBETH and other assets...
Summary: Why is the tragedy so severe?
This incident is not due to a problem with a particular coin itself, but rather the result of three fatal factors overlapping at the same moment:
Macroeconomic black swan: Trump's tariff remarks were an unexpected trigger.
High leverage structure: The market is filled with fragile structures relying on low-cost borrowing and arbitrage.
Liquidity vacuum: The crash occurred in the early Asian hours, which is the worst time for market liquidity; any sell-off can cause huge fluctuations.
In summary: In a vulnerable moment when no one is watching (low liquidity), an external event knocked over the first domino (high leverage lending), triggering a series of stampedes (cascading liquidations and decoupling), ultimately evolving into a full-blown liquidity crisis.
This day rewrote too many people. It’s not about the market, it’s about faith.
Those who think they can master leverage are ultimately devoured by it; those who firmly believe 'this time it’s different' finally understand that the market never believes in tears. Every crash is a forced reset of cognition. 'Heaven and earth are not benevolent, treating all things as straw dogs'; the market is the same, it doesn’t care who you are, only asks who took the last stick in the FOMO.
Just a few days ago, we were still waiting in the plot of script 2, 'using vague panic to deceive chips' was too euphemistic, and yesterday we saw a clear panic wave come into play. Reality and illusion are the nature of the dog dealer. On this day, some people lost savings that they might never earn back in their lifetime.
But from the ruins, there will be new life.
The crash is a complete 'chip reset'. Short-term leverage is crushed, the main chips are concentrated again, on-chain data returns to the starting point, and emotions fall from greed to numbness—this is the best foundation for rebuilding. Market trends cannot be predicted; they only grow from the ruins. Only those who can stabilize themselves and restrain blind action in the aftermath are the next players.
The bloodbath reveals a heavy yet simple lesson:
Do not fight against the storm; learn to dance with it.
Extreme volatility is not the end, but a system reset.
The goal is not to guess the top and bottom but to survive in cognition and seize the opportunity in volatility.
True experts do not get lost in the revelry, but establish order in chaos.
About cycles: A bull market never ends amidst everyone shouting bear. It is only when there is FOMO in altcoins, on-chain excitement, a flood of new players, and interest rate cuts pushing the market soaring that risks truly approach.
If you did not participate in leverage, yesterday's crash has nothing to do with you. The currently cheap high-quality chips are the gifts from the market.
Life always reflects your true self in moments of collapse: thinking you are clever when greedy, only realizing your ignorance when fearful. All transactions ultimately come down to one thing: your opponent is never the market, but yourself.
The storm will pass, and those who survive will have the qualification to talk about the future.
In the great wave of sand, true gold is revealed. The collapse of the market at this moment is the silent beginning of the next cycle.
As for altcoins, if the positions are not heavy and the liquidation line is still far away, this disaster may be survived. If already liquidated, please respect the market: positions can be rebuilt, confidence can be regained, but the cracks in cognition can only be slowly mended by time.
The end of market collapse is the reboot of human nature.