Some stayed up all night, some lost everything overnight: 1011 Black Swan event resets the crypto world

Some people are sleepless all night, some are wiped out overnight—the crypto world once again stages a “doomsday reboot” amid turbulent waves.

October 11, 2025, will be etched into crypto history. Triggered by U.S. President Trump’s announcement to restart the trade war, global markets instantly entered panic mode. Starting at 5 a.m., bitcoin began a near free-fall with almost no support, and the chain reaction quickly spread throughout the entire crypto market.

According to Coinglass data, in the past 24 hours, the total amount of liquidations across the network reached as high as $19.1 billion, with over 1.6 million people liquidated—both the amount and the number of people have set a new record in the ten-year history of crypto contract trading. Some people are sleepless all night, some are wiped out overnight—the crypto world once again stages a “doomsday reboot” amid turbulent waves.

However, why was this round of liquidation so fierce? Has the market bottomed out? BlockBeats has compiled the views of several market traders and well-known KOLs, analyzing this epic liquidation from the perspectives of macro environment, liquidity, and market sentiment, for reference only.

CZ: Buy the Dip

On October 11, CZ reposted the opinion of weRate co-founder Quinten on social media:

“$1.2 billion liquidated during the COVID crash, $1.6 billion during the FTX crash, $19.31 billion today. People wish they had bought during the COVID crash, and this is today’s COVID crash.”

Yilihua (Founder of Liquid Capital)

On October 11, Yilihua, founder of Liquid Capital (formerly LD Capital), posted that the institution has not yet bought the dip and needs to patiently wait for the situation to become clear. The drop this time far exceeded previous expectations. This is the first time since calling ETH that they have fully closed all positions (on-chain and public), previously only using leveraged lending. Here are a few reasons that can be shared:

· First, bitcoin reached a new high resistance level, and without major positive news, a pullback was inevitable.

· Second, U.S. stocks hit new highs, AI and semiconductor companies are playing capital games, which cannot be sustained.

· Third, with Japan about to change its prime minister, the risk of interest rate hikes increases and rates keep rising.

· Fourth, altcoins in the crypto space have been in a persistent downtrend, and MEME mania has drained liquidity.

Vida (Founder of Formula News)

On October 11, Vida, founder of Formula News, posted on social media: “Some time ago, a friend told me there was a guaranteed arbitrage opportunity—doing USDE loop lending on Binance, with an annualized rate of about 26%. His institutional friends used $100 million USDT as principal to loop into $500 million USDE for arbitrage within Binance.”

Vida explained that this massive liquidation is likely due to a sharp market drop in a low-liquidity, unfavorable scenario:

· USDE arbitrageurs’ loop lending positions were forcibly liquidated

· This dragged down the price of USDE

· Causing the collateral capacity of USDE as a unified account collateral to decline

· Triggering more market makers using USDE as margin to be forcibly liquidated

· Causing financial assets like BNSOL and WBETH to also hit liquidation thresholds.

Although assets like BNSOL and WBETH have high collateral ratios, their value is entirely determined by the order book. Under those conditions, no one was willing to support the peg, leading to price collapse and further liquidations. It can be inferred that unified accounts used by some market makers were also liquidated, which is why many small coins had extremely volatile prices.

Kyle (Researcher at DeFiance Capital)

On October 11, Kyle, a researcher at DeFiance Capital, posted on social media that, judging by current market sentiment, the last time something like this happened was during the FTX or Celsius collapse. This crash is basically a “cycle-ending event,” but this time BTC and ETH remained rock solid. The evolution of the crypto industry complex is truly amazing, but altcoins are clearly repeating the same tragedy—despite my repeated warnings in recent months, I never expected it to be this brutal.

In short, now is not the “best” time to buy the dip, but it is definitely the time when you “should” buy the dip. Extreme panic has been released, the market is building a bottom, though there may still be room to fall. Looking at the bigger picture, we are definitely closer to the bottom than the top. Asset selection is crucial now; many projects may never recover.

Benson Sun (Crypto KOL, Former FTX Community Partner)

On October 11, crypto KOL and former FTX community partner Benson Sun posted on social media that many altcoins fell by more than 60% in the early morning. In the past, extreme liquidation events were about $1-2 billion, but this time the scale has increased tenfold. It’s reasonable for crypto to follow U.S. stocks down, but such a massive evaporation of altcoin market cap in the short term is unusual and not simply due to excessive leverage and normal liquidation.

It’s more like major market makers actively withdrawing liquidity, causing the market to instantly fall into a deep vacuum. The decline in altcoins was even more severe than the 3/12 and 5/19 events. This round of deleveraging is arguably the most thorough of the cycle. The market bubble has been completely squeezed out, and risk leverage reset to zero. Still optimistic about Q4, and will spend about a month executing a batch DCA strategy.

@ali_charts (Crypto Analyst)

On October 11, crypto analyst @ali_charts published a market analysis stating that today we witnessed the largest liquidation event in crypto history, which can only be described as a total flash crash. About $19.3 billion in positions were liquidated in one day, affecting about 1.66 million traders. Many assets plunged intraday and then partially rebounded, but the scale of this sell-off raises serious questions about where the market is in the broader cycle.

Digging into historical data, the most recent similar event was at the tail end of the 2021 bull market, shortly after bitcoin hit its $69,200 peak. The December 2021 flash crash wiped out over 24% of market cap in a single daily candle, which later proved to be the start of the ensuing bear market. Today’s daily candle for bitcoin shows a maximum drop of about 17%, remarkably similar in scale and context to the 2021 bull tail crash. The similarities in local market highs, waves of over-leveraged long positions, and cascading liquidations are hard for traders to ignore. While this rebound may be seen as a buying opportunity, caution is essential. Such large-scale liquidations often signal a shift in market structure, not just a temporary drop. This event may represent a market top, possibly followed by a deeper pullback. If you’re holding long positions now, strict risk management is essential—traders should ensure stop-loss orders are active and position sizes are controlled.

Mindao (Founder of DeFi Protocol dForce)

On October 11, Mindao, founder of DeFi protocol dForce, posted on social media that this crash is similar to the Luna blowup in that both occurred when major trading platforms began accepting illegal stablecoins as high LTV collateral, causing risk to penetrate between platforms. Back then it was UST, today it’s USDe—“stability” plus high collateral ratios misled most people.

The worst combination when introducing illegal stable assets as collateral is using market prices as the oracle while allowing high collateral ratios; plus, CEXs themselves don’t have fully open arbitrage environments, so arbitrage efficiency is low and risk is further amplified. LSD-type assets face the same problem. These assets are essentially volatile assets disguised as “stable.”

Haotian (Crypto Researcher)

Honestly, this 10/11 black swan event made me, an originally optimistic industry observer, feel a hint of despair.

I thought I understood the current “Three Kingdoms” situation in crypto, thinking that while the giants fought, retail could still get some scraps. But after this bloodbath, peeling back the layers, I realized that’s not the case.

Frankly, I used to think the tech side was innovating, exchanges were driving traffic, Wall Street was deploying capital, and the three parties each played their own game. As retail, we just needed to time it right—ride the wave of tech innovation, jump on the hot trends, and rush in when capital enters, and we’d get a share of the soup.

But after this 10/11 bloodbath, I suddenly realized that maybe these three parties aren’t competing in an orderly way at all, but are instead ultimately draining all liquidity from the market?

The First Power: Exchange Monopoly, the Vampires Holding Traffic and Liquidity Pools.

To be honest, I always thought exchanges just wanted to build bigger platforms, more traffic, bigger ecosystems, and make money selling shovels. But the USDe cross-margin cascading liquidations exposed the powerlessness of retail under exchange-defined rules. The increased leverage and opaque risk controls, supposedly to improve product and service experience, are actually traps for retail.

All kinds of rebate campaigns, Alpha and MEME launchpads, various financial loop lending, and high-leverage contract plays keep emerging. They seem to give retail more ways to make money, but once exchanges can’t cover the risk of on-chain DeFi cascading liquidations, retail will get dragged down too. That’s life.

What’s truly terrifying is that the top 10 exchanges had $21.6 trillion in Q2 trading volume, but overall market liquidity is still declining. Where did the money go? Besides fees, it’s all kinds of liquidations. Who is draining the liquidity?

The Second Power: Wall Street Capital, Entering Under the Guise of Compliance

I was really looking forward to Wall Street entering, thinking institutional money would bring more stability to the market. After all, institutions are long-term players and can inject incremental capital, letting us enjoy the dividends of crypto merging with TradFi.

But before this crash, there were reports of whales precisely shorting and profiting. Before the crash, several suspected Wall Street wallets opened huge short positions, profiting billions. There are many such stories, and while they sound like insider trading, happening at times of panic makes one wonder: why do institutions always seem to have “pre-trade” advantages before black swan events?

These TradFi institutions, entering under the banner of compliance and capital, what are they really doing? Using stablecoin public chains to bind the DeFi ecosystem, using ETF channels to control capital flows, using various financial instruments to gradually erode the market’s discourse power? Ostensibly for industry development, but in reality? There are too many conspiracy theories about the Trump family making money to mention here.

The Third Power: Tech Natives + Retail Developers, the Cannon Fodder Under Siege.

I think this is where most retail and developers—the so-called builders—truly despair. Since last year, many altcoins have been beaten down, but this time they went straight to zero, forcing us to face the fact that liquidity for many altcoins has almost dried up.

The key is, there’s a pile of infra tech debt, applications aren’t landing as expected, and developers are working hard to build, but the market just doesn’t buy it.

So, I can’t see how the altcoin market will recover, can’t see how these altcoin projects will grab liquidity from exchanges, or how they’ll compete with Wall Street for pump power. If the market no longer buys into narratives, if only MEME gambling remains, then for the altcoin market, this is a decisive purge and reshuffle. Developers flee, industry insiders are structurally reshuffled, and will the market return to nothingness? Sigh, it’s too hard!

So.....

Too much to say, all tears. If the Three Kingdoms situation in crypto continues, with exchanges monopolizing and draining, Wall Street precisely harvesting, and retail techies double-killed, this will be a catastrophic blow to the cyclical playbook of crypto.

In the long run, only a few short-term winners and all long-term losers will remain in the market.