In a single trading session that will be studied for years, the cryptocurrency market suffered its most violent deleveraging event on record — a $19 billion liquidation that exposed just how fragile leverage-fuelled rallies can be when geopolitical shockwaves meet thin market liquidity. The catalyst was blunt: a sweeping US tariff announcement targeting Chinese imports, paired with threats of software export restrictions, sent traders scrambling to unwind risky positions at almost any price.
The Anatomy of a Historic Selloff
The scale of what happened between October 10 and 11, 2025 is difficult to overstate. Analysts described the 24-hour liquidation event as roughly nine times larger than the crypto crash seen earlier in February 2025, and approximately 19 times greater than both the March 2020 pandemic selloff and the catastrophic collapse of FTX in November 2022. To put that in perspective, two of the most notorious meltdowns in crypto history were individually dwarfed by what unfolded last Friday.
Bitcoin — which had touched a record high above $126,000 just days earlier on October 6 — fell to around $104,782 before staging a partial recovery to trade near $115,700. That represented a roughly 14% drawdown from its Friday peak. Ether followed a similar trajectory, sliding 12.2% to lows near $3,436 before rebounding above $4,250.
Smaller altcoins bore the worst of the carnage. HYPE dropped 54%, DOGE collapsed 62%, and AVAX shed as much as 70% before partially recovering. This pattern — where bitcoin holds relatively firm while altcoins get decimated — is a recurring theme during crypto stress events and reflects the asset class’s internal hierarchy of perceived safety.
Options Traders Brace for Round Two
Put Buying Signals Persistent Bearish Sentiment
What’s arguably more revealing than the crash itself is how professional traders are positioning for what comes next. Data from crypto options platforms shows heavy buying of put options — contracts that profit if prices fall — on both bitcoin and ether. In bitcoin, traders have been purchasing puts at strike prices of $115,000 and $95,000 expiring at the end of October, suggesting some market participants expect further downside within weeks.
There has also been a notable shift from buying to selling call options at the $125,000 strike for mid-October expiry. Since calls represent bets on price increases, this transition signals that traders who were previously optimistic are now capping their upside expectations or outright flipping bearish in the near term.
For ether, focus has concentrated around the $4,000 and $3,600 strike levels for October expiries, with additional put buying at $2,600 for December — a sign that bearish hedging is extending well beyond the immediate term into year-end positioning.
Volatility Spiked Across All Maturities
What distinguishes this event from a typical crypto correction is that volatility didn’t just spike for short-dated contracts — it surged across long-dated maturities as well, indicating that market participants are genuinely uncertain about the medium-term outlook, not just bracing for a short-term wobble. This kind of broad volatility expansion is a hallmark of structural fear rather than routine profit-taking. It’s worth recalling that as Sam Altman has argued, US-China technological tensions are far from resolved, and any further escalation in trade or tech policy could continue rattling risk assets including crypto.
Bitcoin Holds Structural Support — Altcoins Not So Much
Despite the severity of the selloff, some on-chain analysts argue that bitcoin’s underlying investor flows held up better than the price action alone might suggest. The working theory among several market watchers is that capital isn’t necessarily leaving crypto entirely — it’s rotating. Funds appear to be moving out of speculative altcoin positions and consolidating into bitcoin, which is increasingly treated as the blue-chip reserve asset of the digital economy.
This mirrors broader institutional behaviour. Institutional investors have been steadily accumulating bitcoin, and during periods of stress, that institutional base tends to provide a floor that smaller tokens simply lack. Ether flows, by contrast, dropped sharply during the event, and Solana continued to weaken — both assets more exposed to retail sentiment and speculative activity than bitcoin.
One important silver lining noted by analysts is that the crash effectively purged excessive leverage from the system. Over-leveraged positions that had been building during the bull run above $120,000 have now been forcibly closed, which historically creates a cleaner base for the next sustained move. The risk is that near-term resistance levels — particularly the $120,000–$125,000 zone for bitcoin — now loom as significant psychological barriers that will require fresh conviction to break.
What This Means
For tech and finance professionals operating in or around the crypto space, this event carries several concrete implications worth internalising:
- Leverage risk management is non-negotiable. The speed and depth of this liquidation cascade demonstrates that leveraged crypto positions can be obliterated in hours when macro triggers align with thin liquidity. Risk models need to account for tail events that are far larger than historical norms.
- Geopolitical risk is now a first-order crypto variable. Trade policy announcements and tech export restrictions moved the crypto market as violently as any on-chain event. Teams managing crypto treasuries or trading desks need macro monitoring as part of their toolkit.
- The altcoin risk premium is real and severe. Assets like AVAX and DOGE losing 60–70% in a single session underlines the liquidity risk embedded in smaller tokens. Portfolio construction should reflect the dramatic difference in drawdown profiles between bitcoin and the long tail of altcoins.
- Options markets are a leading sentiment indicator. The shift toward put buying and away from upside calls is a real-time signal worth tracking for anyone making allocation decisions. Understanding how macro and sentiment factors drive bitcoin price movements is increasingly essential professional knowledge.
It’s also worth noting that security risks don’t disappear during market downturns. Periods of volatility and distress often coincide with increased targeting of crypto holders, as detailed in analysis of why physical ‘wrench attacks’ on wealthy crypto owners are on the rise — a reminder that operational security must remain a priority regardless of market conditions.
Key Takeaways
- The October 2025 crypto liquidation event wiped out $19 billion in leveraged positions in a single day — dwarfing every prior crash in the asset class’s history including FTX and the 2020 pandemic selloff.
- Bitcoin fell roughly 14% from its all-time high before recovering, while smaller altcoins suffered losses of 50–70%, reinforcing bitcoin’s relative resilience as the market’s reserve asset.
- Options market data shows traders are actively hedging against further downside through late October and December, with put buying and call selling signalling persistent near-term bearishness among sophisticated participants.
- The deleveraging, while painful, has cleared the most speculative excess from the market — but bitcoin still faces meaningful technical resistance between $120,000 and $126,000 before a credible new all-time high is achievable.
The Blockgeni Editorial Team tracks the latest developments across artificial intelligence, blockchain, machine learning and data engineering. Our editors monitor hundreds of sources daily to surface the most relevant news, research and tutorials for developers, investors and tech professionals. Blockgeni is part of the SKILL BLOCK Group of Companies.
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