What everyone’s missing about the weekend crypto crash

On Friday, 10 October, the crypto market saw one of its most chaotic days ever, over US$19 billion in liquidations, the largest single-day wipeout in crypto history.

After U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports, Bitcoin sold off from around US$117K. At first, the move looked like a routine market reaction to macro news. But as prices began to slide, an avalanche of forced liquidations kicked in sending prices on some exchanges to absurd lows before snapping back within minutes.

Some of the extreme intraday lows (versus prices at time of writing) illustrate how disorderly the move became:

• BTC:US$108k (now US$115.3k)
• ETH:US$3,550 (now US$4.1k)
• SOL:US$130 (now US$196)
• XRP:US$1.25 (now US$2.52)
• HYPE:US$20 (now US$40)

These prices weren’t truly available they were the product of liquidations and thin order books. When heavily leveraged long positions were forced to close, the lack of buy orders at lower levels meant prices plunged into what are essentially “liquidation vacuums,” before market makers stepped in to restore order.

So why did a single Trump tweet trigger such chaos?

The tweet itself wasn’t the issue, but it exposed how fragile the crypto market structure had become. Leverage was stretched across almost every corner of the market, particularly among newer retail traders using perpetual futures (“perps”).

This bull market has looked very different to past cycles. It’s been led by Bitcoin, with no broad-based “alt season.” In previous cycles, nearly every token rallied together, a rising tide that lifted all boats. This cycle, only a handful of coins have outperformed, leaving many retail traders searching for alternative ways to achieve the asymmetric returns associated with altcoins.

In 2023/2024 the vehicle for high-risk high reward was meme coins, recently it has been leveraged. Instead of buying spot Bitcoin or Ethereum, traders piled into perpetual futures with borrowed money. Decentralized exchanges like Hyperliquid made this even more popular. especially after its late-2024 airdrop, one of the largest in crypto history, which rewarded users for trading activity rather than profitability. It minted a new generation of inexperienced traders who made fortunes because they traded a lot, not because they traded well.

Since then, competitors like Aster and Lighter have launched with their own promised airdrops, fuelling yet another round of speculative, high-risk trading. This has resulted in a massive leverage build up, particularly in thinly traded altcoins.

When Bitcoin began falling on Friday, it pushed prices below key support levels and triggered a chain reaction of forced liquidations, margin calls, and vanishing liquidity. As I told the AFR, with so much leverage concentrated in shallow markets, even a moderate selloff snowballed into a full-blown crash. And with a lot of these new traders not maintaining appropriate risk management (Stop losses and isolated margin), the results were catastrophic.

Despite the turbulence, BTC Markets’ exchange remained fully operational, with no downtime reported, unlike several larger offshore platforms. We saw healthy volumes and heightened activity as traders stepped in to buy the dip, reflecting confidence in the asset class and the maturity of our investor base.

This aligns with findings from our latest Investor Study Report, which shows crypto adoption in Australia reaching new highs. Older Australians, women, and SMSFs are leading the charge, with disciplined investment strategies and long-term capital allocation. SMSF trading volumes rose 151% year-on-year, and women outperformed with fewer trades and larger initial deposits.

While the sell-off exposed excessive leverage, it also highlighted the structural shift underway in Australia’s crypto market, from speculative trading to strategic investment. The sector is evolving, and the data shows that informed, resilient investors are driving that change.

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