The 1011 Liquidation Event: A Wake-Up Call for Systemic Rules in Crypto

Felix

2025/10/17 16:22

The cryptocurrency market, devoid of the quantitative valuation standards found in traditional finance, is driven purely by speculative sentiment. This leads to extreme volatility and unpredictability. The article highlights the following core issues:

Speculative Nature

Cryptocurrencies lack fundamental underpinnings like price-to-earnings ratios or supply chains, with their value dictated largely by market sentiment—a stark contrast to traditional asset classes.

Unlimited Leverage Risks

While traditional finance strictly regulates leverage (e.g., a 2:1 cap on stocks), the crypto market allows retail investors to employ leverage as high as 100x or more. This has triggered frequent cascading liquidations, such as the events in late September and early October 2025, which saw over $1.8 billion and $19 billion in positions forcibly closed, respectively.

Market Fragility

When market sentiment reverses, leveraged long positions can collapse like a "house of cards," wiping out billions in assets within moments—often too quickly for ordinary investors to react.

The Need for Maturation

Despite its $4.3 trillion market size and growing institutional participation, the crypto industry lacks systemic rules and protective measures. Stricter regulation and improved risk management are urgently needed to curb the dangers of excessive leverage and overconfidence.

The article calls on investors to adopt systematic strategies and exercise caution with leveraged trading to navigate the market's high-risk nature.

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Summary

Author: Lucas Kiely

Compiled by: Felix, PANews

The biggest issue with cryptocurrency is its lack of quantifiable value compared to traditional stocks, making it purely speculative. Compounding this, investors can apply extreme leverage to their trades, leading to overnight losses of billions.

Driven by Sentiment, Not Fundamentals

Staunch supporters of blockchain technology argue that its innovative infrastructure confers value. However, there's little evidence this translates into real, tangible returns for token holders. Professional investors from traditional finance often struggle with this paradigm. For tokens, there are no P/E ratios to reference, no supply chains to track—in essence, nothing tangible. This is what makes cryptocurrency unique among asset classes: it's driven entirely by sentiment, and often sentiment that's extremely difficult to predict. Cryptocurrency represents the pure embodiment of free-market forces. Bitcoin might be the sole exception due to its limited supply and ownership increasingly dominated by sophisticated institutions. Yet, the price movements of most cryptocurrencies remain wildly unpredictable, primarily driven by traders.

Confidence, Access, and Unlimited Leverage

One might argue that many stocks aren't valued based on actual worth either—tech stocks like Apple, Meta, and Nvidia have seen elevated valuations for years. But beyond the high price tags, these companies have fundamentals to fall back on: earnings, cash flow, supply chains, and products. Most digital assets have none. Meanwhile, cryptocurrency offers the potential for life-changing returns, and occasionally delivers. These success stories, permanently etched on the blockchain and amplified across social media, make the now $4.3 trillion market impossible for any investor to ignore. However, in this largely unregulated crypto world, investors often act irrationally and make significant mistakes.

A House of Cards

These mistakes frequently manifest as leverage. Leverage itself isn't new to investing. Retail investors can use leverage in traditional finance, but it's regulated. In the U.S., FINRA enforces a 2:1 leverage cap for retail margin accounts on stocks; forex leverage is restricted to professional platforms with strict limits; and derivatives are primarily for qualified investors. In crypto, however, any investor can easily trade with 100x leverage or higher on exchanges. This problem is more acute than ever now that the world's largest institutions are involved. This environment of unrestricted leverage leads to cascading liquidations that can wipe billions from the market in hours, even minutes. Consider the massive liquidation events in late September and early October 2025. The late September event saw over $1.8 billion in leveraged positions wiped out, while the early October event liquidated over $19 billion in positions within hours. While the exact trigger for the October event is debated, it's clear that leveraged long positions got caught in a liquidation spiral when sentiment shifted. Some savvy traders undoubtedly profited from the volatility. But most investors were stopped out before they could even log into their accounts. In crypto, the cost of these mistakes is far greater than in traditional finance due to the near absence of rules. When the market direction reverses, these positions collapse like a house of cards, taking billions with them.

Smarter and Faster

Cryptocurrency is evolving. The world's most prominent asset managers are now participants, and the regulatory environment is becoming more accommodating. Yet, it still lacks the safeguards that can prevent major market events in an instant. This is largely tied to the unrestricted use of leverage, unrealistic expectations, and the entry of institutions powerful enough to move markets with a single trade. Every investor must start taking the market more seriously. Those who made millions from Bitcoin were fortunate, but far more have lost money on altcoins like Dogecoin than have profited. As the industry matures and whales circle, overconfidence and over-leverage pose significant risks. Every investor needs to adopt a more systematic approach to navigate this reality.

The 1011 Liquidation Event: A Wake-Up Call for Systemic Rules in Crypto

Felix

2025/10/17 16:22

The cryptocurrency market, devoid of the quantitative valuation standards found in traditional finance, is driven purely by speculative sentiment. This leads to extreme volatility and unpredictability. The article highlights the following core issues:

Speculative Nature

Cryptocurrencies lack fundamental underpinnings like price-to-earnings ratios or supply chains, with their value dictated largely by market sentiment—a stark contrast to traditional asset classes.

Unlimited Leverage Risks

While traditional finance strictly regulates leverage (e.g., a 2:1 cap on stocks), the crypto market allows retail investors to employ leverage as high as 100x or more. This has triggered frequent cascading liquidations, such as the events in late September and early October 2025, which saw over $1.8 billion and $19 billion in positions forcibly closed, respectively.

Market Fragility

When market sentiment reverses, leveraged long positions can collapse like a "house of cards," wiping out billions in assets within moments—often too quickly for ordinary investors to react.

The Need for Maturation

Despite its $4.3 trillion market size and growing institutional participation, the crypto industry lacks systemic rules and protective measures. Stricter regulation and improved risk management are urgently needed to curb the dangers of excessive leverage and overconfidence.

The article calls on investors to adopt systematic strategies and exercise caution with leveraged trading to navigate the market's high-risk nature.

---

Summary

Author: Lucas Kiely

Compiled by: Felix, PANews

The biggest issue with cryptocurrency is its lack of quantifiable value compared to traditional stocks, making it purely speculative. Compounding this, investors can apply extreme leverage to their trades, leading to overnight losses of billions.

Driven by Sentiment, Not Fundamentals

Staunch supporters of blockchain technology argue that its innovative infrastructure confers value. However, there's little evidence this translates into real, tangible returns for token holders. Professional investors from traditional finance often struggle with this paradigm. For tokens, there are no P/E ratios to reference, no supply chains to track—in essence, nothing tangible. This is what makes cryptocurrency unique among asset classes: it's driven entirely by sentiment, and often sentiment that's extremely difficult to predict. Cryptocurrency represents the pure embodiment of free-market forces. Bitcoin might be the sole exception due to its limited supply and ownership increasingly dominated by sophisticated institutions. Yet, the price movements of most cryptocurrencies remain wildly unpredictable, primarily driven by traders.

Confidence, Access, and Unlimited Leverage

One might argue that many stocks aren't valued based on actual worth either—tech stocks like Apple, Meta, and Nvidia have seen elevated valuations for years. But beyond the high price tags, these companies have fundamentals to fall back on: earnings, cash flow, supply chains, and products. Most digital assets have none. Meanwhile, cryptocurrency offers the potential for life-changing returns, and occasionally delivers. These success stories, permanently etched on the blockchain and amplified across social media, make the now $4.3 trillion market impossible for any investor to ignore. However, in this largely unregulated crypto world, investors often act irrationally and make significant mistakes.

A House of Cards

These mistakes frequently manifest as leverage. Leverage itself isn't new to investing. Retail investors can use leverage in traditional finance, but it's regulated. In the U.S., FINRA enforces a 2:1 leverage cap for retail margin accounts on stocks; forex leverage is restricted to professional platforms with strict limits; and derivatives are primarily for qualified investors. In crypto, however, any investor can easily trade with 100x leverage or higher on exchanges. This problem is more acute than ever now that the world's largest institutions are involved. This environment of unrestricted leverage leads to cascading liquidations that can wipe billions from the market in hours, even minutes. Consider the massive liquidation events in late September and early October 2025. The late September event saw over $1.8 billion in leveraged positions wiped out, while the early October event liquidated over $19 billion in positions within hours. While the exact trigger for the October event is debated, it's clear that leveraged long positions got caught in a liquidation spiral when sentiment shifted. Some savvy traders undoubtedly profited from the volatility. But most investors were stopped out before they could even log into their accounts. In crypto, the cost of these mistakes is far greater than in traditional finance due to the near absence of rules. When the market direction reverses, these positions collapse like a house of cards, taking billions with them.

Smarter and Faster

Cryptocurrency is evolving. The world's most prominent asset managers are now participants, and the regulatory environment is becoming more accommodating. Yet, it still lacks the safeguards that can prevent major market events in an instant. This is largely tied to the unrestricted use of leverage, unrealistic expectations, and the entry of institutions powerful enough to move markets with a single trade. Every investor must start taking the market more seriously. Those who made millions from Bitcoin were fortunate, but far more have lost money on altcoins like Dogecoin than have profited. As the industry matures and whales circle, overconfidence and over-leverage pose significant risks. Every investor needs to adopt a more systematic approach to navigate this reality.