Market crash on Oct 11: a coordinated play on Binance's flaw

19b wiped out in hours. Some traders walked away whole. Others lost everything. That’s not just luck, it’s the hidden power of exchange infrastructure. When crypto crashed this week, traders on different platforms had wildly different results. Some watched their positions get liquidated, even when they thought they were playing it safe. Others managed to stay afloat, or even come out ahead. The real reason? How each exchange is built, and what happens behind the scenes when markets get choppy. On one platform, ADL (auto-deleveraging) caused massive forced liquidations, leaving normal traders footing the bill for others’ risk. Binance had to step in and compensate. Bybit ran smoother, with less drama. Hyperliquid, meanwhile, actually profited, even as their users lost big. But if you were trading through a pro execution system, or had access to special, “institution grade” features, you were shielded from the worst. It’s a huge gap that most retail traders never see… until it’s too late. If the market can swing $19 billion in a blink, where you keep your money and how you trade isn’t just a preference. It’s survival. Next time crypto gets volatile, ask yourself: Are you on the side of the house, or just another player at the table?

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Many case studies could be analyzed for the liquidation of #crypto markets last Friday, but there are a few straightforward takeaways worth focusing on: 1) The asset — for example, Bitcoin — is clearly moving toward institutionalization at high speed. On a day with at least 10x more liquidations than any previous event, during after-hours around 5 p.m. EST, the peak-to-trough drawdown (based on minute data from major exchanges) was about 13%. That represents roughly 4x improvement compared with four or five years ago. It’s already no longer a “scary asset,” considering the Nasdaq’s intraday peak-to-trough this year was around 10% as well. 2) Major #DeFi protocols — especially borrowing and lending platforms — automatically liquidated over $500M collectively in that brief window. #AAVE alone liquidated over $180M, and #Maker close to $70M, all without any human intervention or system failures. The process was smooth, automatic, and performed exactly as designed. As I always argue - open system and open markets are a rare gift for investors — it drives resilience through constant, live-in-front-of-eyes stress testing. You don’t want to defer problems into the future (which, unfortunately, we see a lot in today’s financial systems). DM if you’d like to continue the thread.

Two reasons why 5PM, Friday is made for liquidations. (read: butcher crypto markets) First, we have a precedent. January 31st, also Friday, also a tariff tweet. Supposedly a $2.17B liquidation, for real it was “a lot more than $2B, and at least $8-10B” according to the CEO of Bybit, Ben Zhou. Secondly, Friday evening is the most illiquid hour of crypto trading. Asia is asleep, Europe is either going to sleep or getting wasted in bars, and North and South America are leaving their workplaces for drugs of all kinds. This means liquidity is low (1), reaction time is limited (2), plus trading terminals on almost all exchanges have frozen while processing orders (3), which eliminated any chance to intervene in the trading. Classic playbook now: Friday close Saturday panic Sunday reflection Monday repricing Over 99% of margin accounts in the concentrated group of altcoins were completely wiped out last Friday. During this period, trading volumes were approximately 120 times higher than normal, excluding the TOP-5 crypto assets. Happened once, happened twice, three is the charm?

Trump's tariff shock exposed CEX fragility and proved how resilient DeFi is even in worst-case, "stress test" scenarios. The initial announcement of a 100% tariff on Chinese imports triggered immediate market chaos, overwhelming centralized exchanges like #BNB, #COIN, Kraken, and #HOOD with frozen dashboards and failed trades. Centralized infrastructure buckled when it mattered most. Meanwhile, DeFi protocols handled the volatility with remarkable efficiency. - #AAVE executed $180M in liquidations within an hour without downtime - #UNI processed approximately $9B in daily volume, which is well above baseline levels, without notable slowdowns - #SOL maintained 10,000 transactions per second Markets have been in the process of shifting for a while now. If TradFi wanted to keep up, the time to do that has passed. This same pattern played out during the March 2020 COVID crash and the May 2021 crypto meltdown, but centralized exchanges still haven't solved their scalability issues. IMO, last week's events should accelerate the migration toward decentralized financial infrastructure. #LINK's on-chain price feeds enabling automated liquidations while CEXs show error screens to users makes the value proposition clear as day. While traditional finance sleeps, the future is rapidly migrating to a 24/7/365 on-chain world.

Here's what to know about last week's market selloff, from the perspective of a crypto holder and founder since 2013. → By the numbers, this was a significant liquidation event, much more so than those in the past years. However, as we can see: crypto didn't die, blockchains didn't die, everything kept running. Just as in in the past, the course of web3 will not change. The march of adoption continues. → We've had a lot of regulatory progress this year, but there's more to be done if regulators want to stay on top of market moves like this (especially after hours). → Altcoins are definitely not dead - in fact, I think we will see in the future that some will be more resilient to these swings because they have an entire other value proposition outside of price. Namely, utility. Their value won't just come from markets trading but from their ongoing, daily use in dApps, transactions, etc. What last weekend did show, however, is that we need more builders - web3 entrepreneurs, companies, developers, etc., building applications with real utility. That will bring us a lot more value in the long-term, outside of market swings. Great reporting on the selloff and what happened when by Muyao S. below - highly recommend giving it a read!

10.16 Today's News: At 20:50 UTC on Friday, Trump's unexpected tariff announcement triggered market turmoil, initiating the largest nominal deleveraging in crypto history: over $19 billion in positions were liquidated within approximately 24 hours. Bitcoin plummeted to a low of $106,000-$107,000 before rebounding. U.S. equities plunged in tandem (Nasdaq down 3.6%, S&P 500 down 2.7%—worst single-day performance since April). Three Binance-listed pegged assets—USDe, BNSOL, WBETH—experienced severe decoupling: USDe, which should be pegged 1:1 to the USD, dropped to a low of $0.65. However, Ethena's minting and redemption functions remained operational, and most exchanges maintained parity. wBETH plummeted to $430 at its trough, while BNSOL hit a low of $34.90—discounted by 80%-90% relative to its underlying assets ETH and SOL. The steep declines triggered massive liquidations, prompting exchanges to activate risk control mechanisms. Multiple platforms initiated Automatic Deduction of Liquidation (ADL), limiting further losses during the freefall through forced liquidations.

🚨 $20B Wiped in Hours — But Not Everyone Bled Trump’s imposition of steep tariffs such as the surprise 100% hike on Chinese software imports sparked panic in the crypto markets, triggering the largest liquidation event in history. • 1.6M traders liquidated. • BTC crashed $117K → $104K in 20 mins. • Solana -40%, Ethena -80%, Atom near zero. • Biggest liquidation in crypto history. 🥊 Yet some desks barely flinched. 📉 What Collapsed: • Open interest halved: BTC $67B → $33B, ETH $38B → $19B • Liquidity gone. • Exchanges broke, funding flipped negative. • Retail nuked. Volatility spiked ⚡ Liquidity vanished 💧 = leverage death zone. 🧠Who Survived: Market-neutral desks: • Delta-neutral funds (spot vs perps) • Funding-rate arbitrage • Cross-exchange LPs • Volatility traders dynamically hedged They didn’t bet on direction — they monetized chaos. While others panicked, they got paid for staying flat. ⸻ ⚔️ Lessons: 1️⃣ Conviction ≠ risk control 2️⃣ Neutral ≠ boring — it’s survival 3️⃣ Liquidity dies before your stop-loss triggers This wasn’t the bear market. It was a preview. 🧩 Stay hedged. Stay solvent. Survive to thrive.

Crypto exchange Binance will hand out a further $400 million to crypto traders and institutional users affected by recent liquidations.

🔸 𝗖𝗿𝘆𝗽𝘁𝗼 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗹𝗶𝗱𝗲 𝗼𝗻 𝗧𝗮𝗿𝗶𝗳𝗳 𝗦𝗵𝗼𝗰𝗸 — 𝗕𝗧𝗖 𝗧𝗲𝘀𝘁𝘀 ~$𝟭𝟬𝟲𝗸 🔹 𝗪𝗵𝗮𝘁 𝗰𝗵𝗮𝗻𝗴𝗲𝗱 𝗼𝘃𝗲𝗿𝗻𝗶𝗴𝗵𝘁 A fresh round of U.S.–China tariff headlines hit late Friday into Saturday and triggered a broad risk-off move. Bitcoin dumped intraday to ~$105,900–$104,800 before stabilizing; ETH slipped under ~$3,600 as selling accelerated across majors. 🔹 𝗧𝗵𝗲 𝗹𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗶𝗼𝗻 𝘄𝗮𝘃𝗲, 𝗾𝘂𝗮𝗻𝘁𝗶𝗳𝗶𝗲𝗱 The night of Oct 10–11 marked the largest single-day crypto liquidation on record by dollar value: roughly $19B over 24h, with more than $7B flushed within about an hour at peak velocity. Over 1.6M accounts were liquidated, and the bulk were long positions. • Follow-through hit altcoins hardest as liquidity thinned 🔹 𝗧𝗮𝗽𝗲 𝗮𝗻𝗱 𝗳𝗹𝗼𝘄𝘀 Large caps and high-beta names led the decline as spot liquidity stepped back and perps drove the follow-through. The structure was classic: macro shock → bids pull → perp-led cascade → forced deleveraging. Expect basis/funding to compress as late leverage resets. 🔹 𝗛𝗼𝘄 𝘁𝗼 𝗿𝗲𝗮𝗱 𝗶𝘁 𝗻𝗼𝘄 For BTC, the ~$106k probe highlights sensitivity once below prior ranges. A swift reclaim argues forced-seller exhaustion; failure invites further tests across high-ownership zones. Watch funding, OI, and 25Δ skew for stabilization versus continued stress into the new week.