# The Biggest Liquidation Day in Crypto History: Lessons from the 10·11 Crash

By [Modular blockchain](https://paragraph.com/@modular-blockchain) · 2025-10-11

crypto

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**Event Overview**

October 11, 2025, marked the largest single-day liquidation event in the history of the cryptocurrency market. Bitcoin briefly plummeted below $11,000, USDE de-pegged, and altcoins saw cliff-like declines, with many projects effectively hitting zero within minutes. Over 24 hours, liquidation volumes reached $19.2 billion, affecting more than 1.64 million traders.

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**Causes of the Crash**

\* **Macro Shock:** Trump's announcement of new tariffs on Chinese goods triggered a global sell-off of risk assets, with cryptocurrencies bearing the initial brunt.

\* **High Leverage Bubble:** The market's prosperity was built on leveraged capital from contracts, lending, and more. Negative news triggered a cascade of liquidations, creating a "longs killing longs" scenario.

\* **Market Maker Failure:** Market maker capital was concentrated in major coins. Altcoin liquidity evaporated, and with no buyers during the extreme volatility, prices went into freefall.

\* **Timing Factor:** The crash occurred on a Friday night (Saturday morning in Asia), when global market makers were largely offline, preventing timely liquidity restoration.

\* **Key Cases:** USDE de-pegged to $0.66 due to its looped lending arbitrage mechanism; tokens like IOTX nearly zeroed out.

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**Market Impact & Analysis**

The true liquidation volume is estimated to be between $30-40 billion. While some investors profited from short positions or arbitrage opportunities, the vast majority of retail traders suffered significant losses.

Beyond 312 and 519, the crypto circle has gained another crash memorial day – October 11. Public data might only be the tip of the iceberg. The real cause of the market collapse lies in long-accumulated leverage excess and structural flaws within the market maker system.

The trigger was Trump's tariff announcement, which caused a flight to safety. However, the sheer scale of the crash points to the critical factor: a market built on a foundation of high leverage. The recent bull run was fueled not by long-term capital but by leveraged funds from perpetuals, lending, and yield farming. When the sell-off began, these highly leveraged long positions were the first to fall, triggering a chain reaction of liquidations.

A typical case is USDE. Its 12% subsidy policy spurred massive user participation in looped lending for arbitrage. This mechanism, highly attractive in a bull market, became a significant engine for the apparent prosperity but also a vulnerability. During the crash, USDE de-pegged dramatically.

More critically, the market maker mechanism failed utterly. Analysis suggests active market makers have limited capital, focusing their liquidity primarily on Tier 0 and Tier 1 assets like BTC and ETH. For mid- and long-tail altcoins, support is merely incidental. Post-Jump's collapse, the market relies more on these active MMs, who lack robust tail-risk hedging mechanisms. When panic hit, MMs withdrew liquidity from smaller coins to protect major positions, leaving altcoins with no counterparty and causing their prices to collapse.

Furthermore, the timing was fatal. Occurring on a Friday night/weekend in major time zones, it happened outside market makers' core working hours. Had it happened during a weekday trading session, liquidity might have been restored more quickly.

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**Lessons and Conclusion**

For some, this was an opportunity. A major Bitcoin early investor reportedly placed over $1.1 billion in short positions on BTC and ETH just before the crash, reaping enormous profits. Others engaged in de-pegging arbitrage on assets like USDE, BNSOL, and WBETH.

Overall, the 10·11 crash was not due to a single cause but a conspiracy of three forces: a macro black swan event, structural fragility from leverage excess, and the collapse of market maker liquidity protection.

Witnessing the devastation across social media underscores the market's cruelty and ruthlessness. The crypto market is not a smooth highway but更像是一片布满暗礁的海域 (more like a reef-strewn sea). Bull market prosperity is often an illusion fueled by leverage, with black swans lurking in the shadows. For retail traders, the paramount goal is not constantly chasing massive profits, but survival.

As long as you survive, you have a chance to stand at a new starting point in the next cycle. Once you face complete liquidation in an extreme market event, you might never return to the table.

Let us repeat: Survival is everything.

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*Originally published on [Modular blockchain](https://paragraph.com/@modular-blockchain/the-biggest-liquidation-day-in-crypto-history-lessons-from-the-10·11-crash)*
