In the early hours of October 11, 2025, nearly a year has passed since then. Within 24 hours, the entire network liquidated $13.475 billion, setting a historical record for a single day's clear-out. Of that, $12.111 billion in long positions were liquidated, accounting for nearly 90%, and more than 1.6 million investors were forced out of their positions.
The arguments about it never stopped throughout the year. Looking back at year-end, the causes of this collapse were clearer than they seemed at the time: macro risk resonance, structural imbalances in the market, and the collective failure of trading infrastructure—three things hitting the same day. From the White House to Wall Street, a chain-reaction collapse ignited by policy uncertainty unfolded in Washington.
On October 10, Trump suddenly said on social media that he wanted to impose 100% tariffs on Chinese goods, and that key export controls on technology should be extended to Southeast Asia. The World Trade Organization urgently lowered its forecast for global merchandise trade growth in 2026 to 0.5%, the lowest since 2009. That day, China’s A-share SSE Composite index opened lower and kept falling, down 0.94%; the Nasdaq fell 3.56%. Risk assets began to flee in unison. In 2025, crypto assets were tied to traditional finance more tightly than ever. The 30-day correlation between Bitcoin and the S&P 500 rose to 0.78; S&P volatility could explain about 40% of Bitcoin’s up-and-down moves. This link was more than three times higher than in 2020. When U.S. tech stocks got hit, Bitcoin—treated as a high-risk asset—was sold at the same time. Stocks and coins were both hit. On the macro front, a few other things also converged. The federal government shutdown lasted to day ten, and the Treasury and other key departments began layoffs;
In September, the Fed cut rates by 25 basis points. Officials then added that there was limited room for easing, dashing market hopes for continued “easy money.” Timing was even more lethal. The crash happened in the early hours of Asia, after Western market close—when top market makers weren’t around. No one picked up the selling pressure from the first wave. The fuse was the fuse; the explosives were leverage. The bull market that started in early 2025 was basically pushed up by leveraged funds. Exchanges generally adopted standardized accounts and portfolio margin, lowering the threshold for leverage. Retail investors’ average leverage ratio jumped to 10x, and total market leverage reached 38%, the highest since May 2022. The 12% subsidy on USDe lit another fire: borrowing, staking, then borrowing again created a leverage loop. The larger the scale, the bigger the roll-over became; once collateral dropped, the whole chain snapped. After Bitcoin fell below $115,000, high-multiple long positions blew up first. Liquidation sell-offs pushed prices down, and then prices triggered the next batch of liquidations. Algorithmic trading made this feedback loop run far faster than humans could. People were liquidated even when they were still far from the theoretical explosion price. On the market-maker side, they were also pulling back. Jump and other top market makers retreated from altcoin liquidity during market turbulence, concentrating capital into mainstream coins like Bitcoin. Medium and smaller coins lost counterparties, and sell orders simply slammed the order book to the downside. What truly pushed the stampede to the extreme was the trading infrastructure. That night, no on-chain or off-chain platform managed to hold up. The first to collapse—and collapse hardest—was the on-chain perpetual contract platform Hyperliquid. According to Coinglass data, Hyperliquid’s total liquidations exceeded $10 billion on a single platform, the highest among all trading venues. Binance’s liquidation data was only one-fifth of that. Hyperliquid’s liquidation price levels were fully公开 on-chain. Usually, that’s called “transparency.” That night, it became a road map: sell pressure moved down layer by layer following the publicly available liquidation price levels. After liquidation speed exceeded the capacity of counterparties to take the other side, Hyperliquid triggered, for the first time in more than two years, an all-position automatic deleveraging via ADL. A large number of profitable positions were wiped out by the system without the position holders’ consent. The HLP treasury that backstopped the platform made roughly $40 million over that weekend, providing depositors about 10% returns over two days. In the same weekend, the vast majority of traders absorbed losses at historic levels. On the centralized exchange side, OKX, Binance, Huobi and other top platforms were downstream on the same propagation chain. That night, each of them ran into problems.
A market maker mentioned a detail in a post-mortem after the fact: around 5 a.m., trading pairs like OKX’s FIL and DOGE triggered ADL. For FIL’s perpetual contracts denominated in the coin itself, the order book briefly showed a sell at 0.8 and a buy at 0.2. Liquidity disappeared in about 30 seconds. Users who were reduced had to “replenish their positions at a price with almost no liquidity.” This kind of thing doesn’t happen in just one place. Wintermute’s founder put it even more directly: “The market price was $1, while our short positions were forced to be liquidated by the system at a price of $5.” He said how the ADL execution price is determined—what the trading firms will press on with every exchange—would be the core question. He also said the infrastructure of centralized exchanges is generally far below the standards of traditional finance. In extreme market conditions, they frequently lag and stutter, with no circuit breakers. The root cause lies in the policy environment and industry structure: exchanges are at the end of this chain, and no one avoided it.
On Binance during the same period, there were also brief delays in internal fund transfers and in treasury redemptions. Prices of USDe, WBETH, and BNSOL on the platform briefly deviated. Let’s lay out the timeline clearly: Binance’s published data shows that the market’s lowest price occurred between 21:20 and 21:21 UTC on October 10, and severe de-pegging for USDe happened after 21:36. It first fell, then de-pegged—the de-pegging was the result of a stampede. Binance launched compensation the next day after the incident and later paid out $283 million to cover de-pegging-related losses. After the crash, appeals and rights-protection efforts across exchanges continued for a long time. Institutions kept pressing for the execution logic behind ADL, while retail traders organized claims in communities—from Hyperliquid to OKX, Binance, and Huobi. Anyone liquidated at absurd prices, anyone forcibly reduced, anyone who didn’t have time to add margin—everyone was looking for an explanation. In that 1011 event, no platform was able to stay out of it.
This collapse looked sudden, but warning signs appeared by late September—people just didn’t want to look in a bull market. Rising correlation was the first signal. The 30-day correlation between Bitcoin and Nasdaq rose from 0.45 in 2024 to 0.78 in October 2025. The crypto market can no longer move independently of the macro cycle. After the Fed cut rates in September, the S&P 500 and Bitcoin hit fresh highs in sync. That synchronization went both ways: when traditional markets fall, crypto can’t dodge it. During the National Day holiday period, U.S. stocks ended slightly higher; the Philadelphia Semiconductor Index surged 4.16%, but gold broke through $4,000. Optimism toward tech stocks and worry about macro risk both existed, and that contradiction should have alerted crypto investors. On-chain data was off as early as late September. Net inflows to Bitcoin exchanges increased week over week for three straight weeks. In the last week of September, net inflows reached 250,000 BTC, the highest since November 2023—long-term holders were distributing.
According to Glassnode data, addresses holding for more than a year saw a 120% increase in outflow volume between October 1 and October 8. Large transfers of more than 1,000 coins numbered 127, which is 83% more than the same period last month. The changes in stablecoins were even more striking. USDe’s market cap surged 45% in September—from $12 billion to $17.4 billion. Growing that quickly, paired with 12% subsidies, suggests a large amount of arbitrage capital was pouring in. Over the same period, USDT’s market cap fell by $2.8 billion during the National Day holiday, and the speed at which funds rotated from stablecoins to risk assets slowed—risk appetite had already started to contract. Leverage and volatility were also paired into a dangerous combination. As of October 10, open interest in Bitcoin perpetual futures was $28 billion—up 56% from the beginning of September. The growth rate of open interest on on-chain perpetual platforms was especially fast, but Bitcoin’s volatility index was only 65, at a low level since 2024. High leverage with low volatility has appeared many times historically before reversals. The options market was even more telling: the ratio of call to put options with October expiry was 3.2, the highest since November 2021. With such extreme imbalance between longs and shorts, it is often a precursor to a market reversal. On the technical side, after Bitcoin surged to $126,080 on October 7, it formed a double top. RSI reached 85 on October 8 and then showed a bearish divergence at the highs: the price made new highs, but RSI didn’t keep up. Ethereum was weaker: on the 4-hour chart near $4,500 it showed bearish divergence three times, and trading volume kept shrinking. Altcoins’ technicals had already broken down early. Tokens like IOTX and ATOM were selling off with heavy volume before October 1, with 5-day declines exceeding 20%, later being overshadowed by Bitcoin’s strength. Mainstream coins provided cover while altcoins ran first—this was the pattern before the crashes of May 2021 and June 2022.
Signs of tightening regulation were also emerging throughout the third quarter. The U.S. SEC, together with 37 countries, launched a “crypto asset clarity” initiative, requiring exchanges to freeze accounts that hadn’t completed KYC within 48 hours. As a result, average daily trading volume plunged by 65%. EU MiCA implementation details were rolled out at the end of September, requiring crypto asset service providers to operate under licenses and limiting the market share of non-euro stablecoins. Although it didn’t take effect immediately, the market was already worried about the stablecoin ecosystem. In early October, Hong Kong’s Monetary Authority issued the (Regulatory Guidance on Crypto Asset Trading Platforms), requiring platforms to reserve 20% risk capital. In a bull market, nobody paid attention to it. Only after the crash did people recognize its foresight. In the week after the crash, the entire financial industry was debating whether the bull market was over. At the time, the judgment was that it was a deep adjustment—not a reversal of the trend.
A year later, the things supporting this judgment are still in place. The base of global liquidity remaining loose hasn’t changed. The Fed cut rates by 25 basis points in September to kick off a new easing cycle. The FOMC projected that by 2026 the target policy rate would drop to 3.4%; if inflation stays subdued, it could continue to be cut further. In prior Fed easing cycles, crypto’s performance has historically been consistently strong. In the 2020 rate-cut cycle, Bitcoin rose from $7,000 to $28,000. The reaction from capital also tells the story. After the selloff, funds flowed out in the short term, but Bitcoin ETFs saw net inflows of $2.71 billion from October 12 to October 15, and Ethereum ETFs had net inflows of $488 million—institutions were buying the dip.
In BlackRock’s Q3 portfolio report, it said institutional clients’ crypto allocations increased by 12% and maintained its 2026 Bitcoin forecast to $180,000. Institutional entry changed the structure of this market. Institutional Bitcoin holdings rose from 15% in 2022 to 32% in October 2025. Top institutions like Grayscale and BlackRock accounted for 18% of holdings—up 8 percentage points from 2024. Unlike the 2021 bull run led by retail traders, in 2025 the share of institutional funds exceeded half. This money is meant for long-term allocation and won’t be pulled out at large scale just because of one bout of volatility. The integration between traditional finance and crypto also didn’t stop: after the selloff, Goldman expanded its crypto research team by one-third; Morgan Stanley launched a hybrid investment product combining crypto assets and stocks; and after the crash, CME’s Bitcoin futures open interest decreased by only $2 billion, while open interest still remained above 250,000 contracts.
The technology track kept moving forward. After Ethereum’s Shanghai upgrade, the staking yield stabilized at 4.2%. Over 28 million ETH were staked, accounting for 22% of circulating supply. In Bitcoin’s Lightning Network, transaction volume surpassed $1 billion in September—up 35% from the previous month. Fear around quantum computing faded as well. On October 8, the Nobel Prize in Physics was awarded for foundational research in quantum computing. Charles Edwards of Capriole Investments said there are 4.5 million Bitcoins placed in early addresses that are vulnerable to quantum attacks. That topic briefly boosted risk-averse capital to move out.
Afterward, Bitcoin’s core development team initiated a quantum-resistance upgrade proposal, QRAMP. It planned to replace the ECDSA signature mechanism before 2026. Blockstream tested an SPHINCS+ hybrid approach for its post-quantum algorithms. Even the pullbacks themselves didn’t exceed historical experience. During the 2017 bull market, Bitcoin had four drawdowns of more than 20%, with the largest at 36%. In the 2020–2021 run, there were three drawdowns of more than 30%, and the last ones still went on to set new highs.
After 1011, Bitcoin fell from 126,000 to 98,000, a maximum drop of 22%—within the normal range for pullbacks in historical bull-market corrections. The Fear and Greed Index fell from 85 before the selloff to 38. Panic was released quickly. So what 1011 really should be accounted for is the liquidation mechanism. Questions like how ADL execution prices are set, whether circuit breakers exist in extreme conditions, and whether market makers can take over positions near liquidation when liquidity dries up—before October 11, nobody answered these questions seriously. This crash pushed the industry toward de-leveraging, tighter regulation, and greater emphasis on value. In the short term it means volatile repair; in the long term it should lead to a healthier market—provided that someone truly goes back and changes these things.