The crypto market recently went through one of its most volatile shakes — and to everybody's surprise, Bitcoin wasn't the culprit. While the headlines usually center on Bitcoin and Ethereum, this time the smaller, lesser-known tokens were the spark that set the avalanche off.
The $19 Billion Blowout
On 10th October, over 1.6 million traders got hit by a liquidation storm, erasing over $19 billion in leveraged bets in a span of 24 hours. It was CoinGlass's largest single-day liquidation on record — a catastrophic milestone in what had otherwise been a robust year for digital tokens.
Market leaders Bitcoin and Ethereum dropped around 11–13% from their highest point. Altcoins like Solana, Dogecoin, XRP, and BNB, though? They plunged as much as 80% at the peak of the chaos. These coins, which were often utilized for high-leverage trading, were much more exposed when the situation shifted.
The Doom Loop Effect
Why did it crash? A geopolitical shock — President Trump's announcement of colossal tariffs on China — shook markets globally. In cryptocurrency, those fears became a feedback loop. When prices dropped, margin systems revalued collateral, triggering forced liquidations. Each liquidation drove prices lower, triggering more margin calls. It was a textbook doom loop.
Frank Chaparro of GSR explained it best: “You’re pouring gasoline on fire in a way that’s not the case in other highly leveraged markets.”
Leverage Gone Wild
Offshore exchanges like Hyperliquid and Aster now offer leverage of up to 1,001x — a stratospheric figure that turns small price movements into astronomical gains or debilitating losses. While such products attract risk-loving traders, they also add risk to the entire ecosystem.
Grayscale's Zach Pandl put it bluntly: "More leverage means more risk in every financial market.".
Infrastructure Under Strain
Crypto’s 24/7 nature clashes with its outdated infrastructure. Unlike traditional markets, crypto lacks circuit breakers and institutional safeguards. Chaparro noted that the market is “built effectively on a nine-to-five exchange infrastructure,” making it vulnerable to sudden shocks.
What Comes Next?
Crypto researcher Molly White warned that this event could be a preview of future volatility. As crypto becomes more intertwined with mainstream finance, the stakes grow higher. But others, like Bitwise strategist Juan Leon, see hope in institutional capital. Big players don’t chase 50x leverage — they hold longer and trade smarter.