Event Overview: The cryptocurrency market experienced an epic crash in the early hours. Bitcoin briefly fell to $102,000 and Ethereum to $3,392. The total liquidation amount across the network reached $19.141 billion, setting a historical record. Market panic primarily stemmed from Trump's surprise tariff policy.

Root Cause: Trump announced on social media the cancellation of his meeting with China and plans to impose an additional 100% tariff on Chinese imports starting November 1st, alongside export controls on key software. This triggered a stock market plunge on Wall Street, with panic spreading to the crypto market.

Market Maker Funding Dilemma: Analysis suggests that due to limited capital, market makers prioritized protecting large projects during the sell-off, leaving small altcoins without support and exacerbating the crash.

Technical Chain Reaction: USDe de-pegged to $0.60 on Binance, triggering recursive loan liquidations and amplified margin call liquidations, further accelerating the decline. Binance has confirmed the de-peg issue with USDe and other tokens and is reviewing compensation measures.

Outlook and Risks: Trump's policy reversals could replay the "TACO trade" (short first, then go long). However, deteriorating Sino-US relations and the risk of a US government shutdown intensify market uncertainty. Investors are advised to avoid blindly buying the dip.

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The crypto market was bloodied in the early hours, with the root cause traced to a surprise tariff policy from US President Trump. On Truth Social, Trump accused China of "sending letters to multiple countries, planning to implement export controls on all elements involving rare earths," criticizing it as a highly "hostile" move equivalent to holding the world hostage with rare earth resources.

Subsequently, Trump announced that the meeting with China scheduled for two weeks later during the APEC summit in South Korea was no longer necessary, effectively canceling the Trump-Xi meeting. More significantly, during the US stock market's after-hours session, Trump declared an additional 100% tariff on Chinese imports effective November 1st, alongside export controls on "all critical software" starting the same day.

This news directly impacted Wall Street. On the 10th, US stocks initially rose then fell sharply. The Dow Jones Industrial Average swung from a gain of 283 points to a crash of 887 points; the Nasdaq Index plunged over 3.56% at one point. The VIX fear index broke above 20 for the first time since April, indicating a sharp increase in market stress.

Stock market panic quickly spread to the crypto market. Bitcoin briefly wicked down to $102,000 this morning, recovering to around $111,000 at the time of writing—bringing its price back to October 1st levels. Ethereum fell to $3,392 at one point, trading around $3,745 at the time of writing. The total crypto market capitalization fell nearly 10%, with altcoins hit particularly hard; the Altcoin Season Index on CMC dropped to 35.

According to Coinglass data, liquidations across the network in the past 24 hours reached $19.141 billion, setting another historical record. A total of 1,621,284 traders were liquidated globally, with long positions accounting for $16.686 billion and short positions for $2.455 billion in liquidations. The largest single liquidation order occurred on the Hyperliquid platform for an ETH-USDT perpetual contract, valued at $203 million.

By asset: Bitcoin liquidations totaled $5.317 billion, Ethereum $4.378 billion, SOL $1.995 billion, HYPE $888 million, and XRP $699 million.

After the early morning crash, funding rates on major CEXs and DEXs currently indicate the market has clearly turned bearish.

Behind the Altcoin Crash: A Market Maker Funding Dilemma?

Crypto KOL @octopusycc analyzed that the altcoin plunge was entirely a problem with market makers—a classic case of their inability to hedge adequately.

The core issue lies in the limited capital of market makers. Market makers allocate funds tieredly across different projects, giving Tier0 projects the most capital, decreasing sequentially down to Tier4 projects receiving the least support. After Jump's collapse, the market structure became unbalanced, with a large number of projects previously serviced by Jump flowing to other market makers, whose capital was insufficient to meet the demand from all these projects.

When Trump's tariff announcement triggered a market sell-off, under capital constraints, market makers could only prioritize protecting Tier0 and Tier1 major projects, even resorting to reallocating funds originally assigned to smaller projects to rescue the larger ones. The result of this resource reallocation was the primary reason small altcoin projects completely lost support.

Technical Chain Reaction: USDe De-pegging Triggers Cascading Liquidations

Beyond the macro trigger and market maker funding issues, several industry insiders provided in-depth analysis, suggesting the direct technical cause of this epic crash was a chain reaction initiated by USDe de-pegging on Binance.

Dovey Wan, Co-founder of Primitive Ventures, posted on X, speculating that the crash was likely caused by a major institution (possibly a traditional trading firm using cross-margin) getting liquidated on Binance. Dovey pointed out: "While awaiting deeper analysis, preliminarily, USDe's price on Binance dropped to $0.6 at one point, while prices on other exchanges held relatively firm. Furthermore, a huge divergence in volatility has emerged between tokens listed on Binance and those not listed." This implies USDe de-pegged by up to 40% on Binance, and the problem might be concentrated on Binance rather than the entire market.

Crypto KOL '憨巴龙王' stated, "(This market crash might be) due to the 12% subsidy on USDe, where many market users engaged in USDe recursive loans. Affected by Trump's trade war impact, USDe was attacked via premium, leading to the liquidation of USDe recursive loans, causing USDe to fall further."

He further highlighted a fatal chain reaction: "Coupled with some whales and market makers using USDe as margin for contracts, affected by the de-peg and discount of USDe, leverage inexplicably doubled, ultimately causing even 1x long positions to be liquidated. (Further triggering a chain reaction,) small altcoin contract prices fell rapidly, USDe fell rapidly or even doubled down, ultimately causing significant losses for market makers."

Crypto KOL BitHappy argued: "This time, on-chain liquidation performance was better than on exchanges, especially at the lending level. This is largely due to the design of protocols like Ethena and AAVE, which, to increase TVL, encourage recursive loans and fix the value of loan assets and collateral assets at 1:1." He illustrated with an example: "For instance, the previous USDT-USDe recursive loan on Aave had no liquidation risk because it used a fixed oracle, combined with the subsidy campaign at the time, which boosted TVL by tens of billions in just a few days. This mechanism also led to almost all stablecoins being fixed at 1:1 in the oracles of lending protocols. Therefore, most users engaged in stablecoin recursive loans on-chain basically emerged unscathed."

However, the situation on Binance was completely different. "The most severe liquidation losses for USDe occurred on Binance. On one hand, Binance launched a 12% interest campaign for USDe, attracting many whales to participate in recursive loans (resulting in almost total wipeout). On the other hand, USDe could also be used as contract margin."

Binance has officially released an announcement confirming that USDE, BNSOL, and WBETH recently experienced price de-peg issues, leading to forced liquidations for some users. The Binance team stated they are conducting a comprehensive review of affected users and related compensation measures, while also strengthening risk management controls to prevent similar incidents.

Market Outlook: Will the 'TACO Trade' Replay?

Finally, looking at the macro perspective, this is not the first time Trump has made surprise statements. Initially, in April, raising China tariffs to 145% also caused a market crash, but eventually, the US government stance reached a stalemate, later indefinitely postponing the implementation of the China tariffs, after which the market steadily climbed.

Many investors jokingly refer to this market trend "manipulated" by Trump as the TACO trade: short the market immediately when Trump announces the tariff policy (quick market sentiment reaction), then go long again after a few trading days (Trump softens his stance/cancels the policy).

While seizing the timing to buy the dip might be a good opportunity, currently, Sino-US relations show signs of deterioration again. Coupled with the US government shutdown being another risk factor: the White House Office of Management and Budget (OMB) stated on the 10th that it has begun reducing federal employees. White House officials said this federal-level layoff involves at least thousands of people, and there is still no resolution in sight for a federal government shutdown. Investors are advised to wait for the situation to stabilize before making moves, avoiding blindly buying the dip amidst high uncertainty to prevent experiencing another wick risk.

Event Overview: The cryptocurrency market experienced an epic crash in the early hours. Bitcoin briefly fell to $102,000 and Ethereum to $3,392. The total liquidation amount across the network reached $19.141 billion, setting a historical record. Market panic primarily stemmed from Trump's surprise tariff policy.

Root Cause: Trump announced on social media the cancellation of his meeting with China and plans to impose an additional 100% tariff on Chinese imports starting November 1st, alongside export controls on key software. This triggered a stock market plunge on Wall Street, with panic spreading to the crypto market.

Market Maker Funding Dilemma: Analysis suggests that due to limited capital, market makers prioritized protecting large projects during the sell-off, leaving small altcoins without support and exacerbating the crash.

Technical Chain Reaction: USDe de-pegged to $0.60 on Binance, triggering recursive loan liquidations and amplified margin call liquidations, further accelerating the decline. Binance has confirmed the de-peg issue with USDe and other tokens and is reviewing compensation measures.

Outlook and Risks: Trump's policy reversals could replay the "TACO trade" (short first, then go long). However, deteriorating Sino-US relations and the risk of a US government shutdown intensify market uncertainty. Investors are advised to avoid blindly buying the dip.

---

The crypto market was bloodied in the early hours, with the root cause traced to a surprise tariff policy from US President Trump. On Truth Social, Trump accused China of "sending letters to multiple countries, planning to implement export controls on all elements involving rare earths," criticizing it as a highly "hostile" move equivalent to holding the world hostage with rare earth resources.

Subsequently, Trump announced that the meeting with China scheduled for two weeks later during the APEC summit in South Korea was no longer necessary, effectively canceling the Trump-Xi meeting. More significantly, during the US stock market's after-hours session, Trump declared an additional 100% tariff on Chinese imports effective November 1st, alongside export controls on "all critical software" starting the same day.

This news directly impacted Wall Street. On the 10th, US stocks initially rose then fell sharply. The Dow Jones Industrial Average swung from a gain of 283 points to a crash of 887 points; the Nasdaq Index plunged over 3.56% at one point. The VIX fear index broke above 20 for the first time since April, indicating a sharp increase in market stress.

Stock market panic quickly spread to the crypto market. Bitcoin briefly wicked down to $102,000 this morning, recovering to around $111,000 at the time of writing—bringing its price back to October 1st levels. Ethereum fell to $3,392 at one point, trading around $3,745 at the time of writing. The total crypto market capitalization fell nearly 10%, with altcoins hit particularly hard; the Altcoin Season Index on CMC dropped to 35.

According to Coinglass data, liquidations across the network in the past 24 hours reached $19.141 billion, setting another historical record. A total of 1,621,284 traders were liquidated globally, with long positions accounting for $16.686 billion and short positions for $2.455 billion in liquidations. The largest single liquidation order occurred on the Hyperliquid platform for an ETH-USDT perpetual contract, valued at $203 million.

By asset: Bitcoin liquidations totaled $5.317 billion, Ethereum $4.378 billion, SOL $1.995 billion, HYPE $888 million, and XRP $699 million.

After the early morning crash, funding rates on major CEXs and DEXs currently indicate the market has clearly turned bearish.

Behind the Altcoin Crash: A Market Maker Funding Dilemma?

Crypto KOL @octopusycc analyzed that the altcoin plunge was entirely a problem with market makers—a classic case of their inability to hedge adequately.

The core issue lies in the limited capital of market makers. Market makers allocate funds tieredly across different projects, giving Tier0 projects the most capital, decreasing sequentially down to Tier4 projects receiving the least support. After Jump's collapse, the market structure became unbalanced, with a large number of projects previously serviced by Jump flowing to other market makers, whose capital was insufficient to meet the demand from all these projects.

When Trump's tariff announcement triggered a market sell-off, under capital constraints, market makers could only prioritize protecting Tier0 and Tier1 major projects, even resorting to reallocating funds originally assigned to smaller projects to rescue the larger ones. The result of this resource reallocation was the primary reason small altcoin projects completely lost support.

Technical Chain Reaction: USDe De-pegging Triggers Cascading Liquidations

Beyond the macro trigger and market maker funding issues, several industry insiders provided in-depth analysis, suggesting the direct technical cause of this epic crash was a chain reaction initiated by USDe de-pegging on Binance.

Dovey Wan, Co-founder of Primitive Ventures, posted on X, speculating that the crash was likely caused by a major institution (possibly a traditional trading firm using cross-margin) getting liquidated on Binance. Dovey pointed out: "While awaiting deeper analysis, preliminarily, USDe's price on Binance dropped to $0.6 at one point, while prices on other exchanges held relatively firm. Furthermore, a huge divergence in volatility has emerged between tokens listed on Binance and those not listed." This implies USDe de-pegged by up to 40% on Binance, and the problem might be concentrated on Binance rather than the entire market.

Crypto KOL '憨巴龙王' stated, "(This market crash might be) due to the 12% subsidy on USDe, where many market users engaged in USDe recursive loans. Affected by Trump's trade war impact, USDe was attacked via premium, leading to the liquidation of USDe recursive loans, causing USDe to fall further."

He further highlighted a fatal chain reaction: "Coupled with some whales and market makers using USDe as margin for contracts, affected by the de-peg and discount of USDe, leverage inexplicably doubled, ultimately causing even 1x long positions to be liquidated. (Further triggering a chain reaction,) small altcoin contract prices fell rapidly, USDe fell rapidly or even doubled down, ultimately causing significant losses for market makers."

Crypto KOL BitHappy argued: "This time, on-chain liquidation performance was better than on exchanges, especially at the lending level. This is largely due to the design of protocols like Ethena and AAVE, which, to increase TVL, encourage recursive loans and fix the value of loan assets and collateral assets at 1:1." He illustrated with an example: "For instance, the previous USDT-USDe recursive loan on Aave had no liquidation risk because it used a fixed oracle, combined with the subsidy campaign at the time, which boosted TVL by tens of billions in just a few days. This mechanism also led to almost all stablecoins being fixed at 1:1 in the oracles of lending protocols. Therefore, most users engaged in stablecoin recursive loans on-chain basically emerged unscathed."

However, the situation on Binance was completely different. "The most severe liquidation losses for USDe occurred on Binance. On one hand, Binance launched a 12% interest campaign for USDe, attracting many whales to participate in recursive loans (resulting in almost total wipeout). On the other hand, USDe could also be used as contract margin."

Binance has officially released an announcement confirming that USDE, BNSOL, and WBETH recently experienced price de-peg issues, leading to forced liquidations for some users. The Binance team stated they are conducting a comprehensive review of affected users and related compensation measures, while also strengthening risk management controls to prevent similar incidents.

Market Outlook: Will the 'TACO Trade' Replay?

Finally, looking at the macro perspective, this is not the first time Trump has made surprise statements. Initially, in April, raising China tariffs to 145% also caused a market crash, but eventually, the US government stance reached a stalemate, later indefinitely postponing the implementation of the China tariffs, after which the market steadily climbed.

Many investors jokingly refer to this market trend "manipulated" by Trump as the TACO trade: short the market immediately when Trump announces the tariff policy (quick market sentiment reaction), then go long again after a few trading days (Trump softens his stance/cancels the policy).

While seizing the timing to buy the dip might be a good opportunity, currently, Sino-US relations show signs of deterioration again. Coupled with the US government shutdown being another risk factor: the White House Office of Management and Budget (OMB) stated on the 10th that it has begun reducing federal employees. White House officials said this federal-level layoff involves at least thousands of people, and there is still no resolution in sight for a federal government shutdown. Investors are advised to wait for the situation to stabilize before making moves, avoiding blindly buying the dip amidst high uncertainty to prevent experiencing another wick risk.