Financial leverage, low liquidity and macroeconomic tensions collided, wiping $16,700 off the price of Bitcoin in less than eight hours, a painful lesson in risk and reaction.
Bitcoin's record run over $126,000 on Monday 6 October 2025 lasted just five days before collapsing into chaos. By Friday evening, the world's largest cryptocurrency had plummeted to $105,000, losing 13.7 per cent in less than eight hours and burning some $20 billion in leveraged positions.
According to CoinGlass, $5 billion in crypto derivatives were liquidated as margin systems collapsed under an avalanche of sell orders. Exchange infrastructure struggled to keep up. By the time weekend trading stabilised, open interest on futures was down 13 per cent in BTC terms, a rare but not unprecedented event in Bitcoin's volatile history.
Meanwhile, the revolution of spot ETFs on BTC has made Bitcoin more accessible but, perhaps, also more fragile. The liquidity that underpins these instruments rests on thin institutional rails: gaps emerge during weekends and holidays when US custodians suspend transactions.
Friday's partial closure in the run-up to the holiday amplified these gaps. Without synchronised clearing or settlement, even small sell orders can turn into mechanical spirals of settlement on perpetual futures.
Macroeconomic Shock: Trump's Duties Unleash a "Risk-Off" Chain Reaction"
The timing of the collapse was not coincidental. Markets were already jittery when President US President Donald Trump surprisingly announced a 100 % tariff on Chinese imports, citing Beijing's export restrictions on rare earths - crucial materials for semiconductor production.
His post on Truth Social came just as the US Friday session thinned out due to the upcoming bank holidays. Bitcoin, now considered a risk asset sensitive to macro factors since spot ETFs were approved, reacted immediately by slipping below $110,000 within hours.
The political shock triggered a domino effect in leveraged crypto markets, where liquidity was already strained.
The Data: $20 Billion in Liquidations on Major Exchanges
Hyperliquid: $10.31bn, the highest figure ever recorded on a single exchange.
Bybit: $4.65bn
Binance: $2.41bn
OKX: $1.21bn
HTX: $362m
Gate: $264m
The CEO of Crypto.com, Kris Marszalek, publicly called on regulators to investigate whether some exchanges had "slowed down or misvalued assets" during the crash, raising questions about fairness and compliance checks.
Regulators should look into the exchanges that had most liquidations in the last 24h and conduct a thorough review of fairness of practices. Any of them slowing down to a halt, effectively not allowing people to trade? Were all trades priced correctly and in line with indexes?... pic.twitter.com/UCD6iKuKFQ
While accusations were flying on social media, on-chain forensics told a more subtle story.
Mefai's On-Chain Autopsy: Coinbase, not Binance, Moved First
Analysis firm Meta Financial AI (Mefai) has published a detailed reconstruction of the sell-off, identifying Coinbase as the first major player to have moved large amounts of Bitcoin before the collapse.
His investigation found:
a transfer of 1.066 BTC from Coinbase's cold wallet to a hot wallet a few hours before the crash;
a newly created wallet linked to US entities that had purchased 1,100 BTC from Binance, then transferred to Coinbase three days before the crash;
Binance's cold wallets and addresses linked to CZ remained inactive, debunking the notion that insider sales triggered the panic.
"All of Binance's cold wallets are public and have shown no abnormal activity," Mefai's report noted. "The first significant transactions started from Coinbase, likely linked to institutional desks."
Mefai look from a different perspective. We will document everything that transpired on Binance last night, so that it may serve as a lesson for the future.
Binance, as the world's largest exchange, became the epicenter of this wave of selling and the atmosphere of panic....
Mefai also pointed to Wintermute, a London-based market maker, as a key catalyst for liquidity: profit-driven, active on multiple exchanges and often the first to exploit volatility gaps. Its presence, Mefai argues, amplified the cascade of liquidations rather than causing it.
Liquidity Architecture: How a $16 thousand drop became a system shock
The chain reaction was fuelled by liquidity leverage and interdependence. Almost every large altcoin maintains an order book coupled with BTC, meaning that the collapse of Bitcoin automatically revalued the entire market.
When the price of BTC dropped by $20k in a matter of minutes, algorithmic trading systems triggered mass sales on multiple pairs. Buying books emptied faster than market makers could replenish them.
In a matter of minutes, automated hedging systems were overwhelmed - not by manipulation, but by the sheer speed of cascading liquidations.
"It wasn't the exchanges that made money," concluded Mefai. "It's been a huge transfer of wealth from the longs to the shorts."
Bitcoin Price Perspectives: Key Levels to Monitor
At the time of publication:
BTC trades around 111.700, down 10.4 % on a weekly basis, with 24 h volume of around $77 billion.
Key support is at $110k: a decisive break below this level could open the way to $104-107k.
Recovery of $114-115 thousand would signal a return of momentum towards $120 thousand.
The pattern is reminiscent of double resistance (double-top) at $125 thousand, a technical configuration that often anticipates a medium-term consolidation phase.
What To Expect: Lessons in the Era of Always-Open Markets
Crypto traders have been known to look for culprits: Trump's tweet, Binance's servers, the "market makers". But, when the dust settles, the lesson is easier.
The era of Bitcoin ETFs has merged the liquidity expectations of Wall Street with the 24/7 risk of the crypto world. When liquidity dries up, both systems cave in at their weakest points: the over-indebted and the over-confident.
Mefai's final warning was direct:
"If you can't monitor the market around the clock, automate it. Track movements on-chain. Nobody moves millions on a hot wallet out of boredom: they do it to sell."
For traders, the old rule still applies: don't trust the calm. Use a stop-loss.
Friday's crash was not a conspiracy; it was a test of liquidity in a system already strained between leverage, automation and political tremors. Bitcoin may stay above $110,000, but the psychological damage remains.
The world's most decentralised asset has just learned another lesson in centralisation:
When macro chaos strikes, there is no truly safe haven - not even on the blockchain.
Institutional inflows and steady demand offset the dampening effect of tighter monetary policy. Traders now look to the Federal Reserve's signals for direction this week.
Rumble is about to launch a Bitcoin tipping feature, supported by Tether, with a full rollout planned by December. This initiative positions the platform as a pioneer in blockchain-based monetisation for its base of 51 million active users.
Bitcoin's record run over $126,000 on Monday 6 October 2025 lasted just five days before collapsing into chaos. By Friday evening, the world's largest cryptocurrency had plummeted to $105,000, losing 13.7 per cent in less than eight hours and burning some $20 billion in leveraged positions.
According to CoinGlass, $5 billion in crypto derivatives were liquidated as margin systems collapsed under an avalanche of sell orders. Exchange infrastructure struggled to keep up. By the time weekend trading stabilised, open interest on futures was down 13 per cent in BTC terms, a rare but not unprecedented event in Bitcoin's volatile history.
Meanwhile, the revolution of spot ETFs on BTC has made Bitcoin more accessible but, perhaps, also more fragile. The liquidity that underpins these instruments rests on thin institutional rails: gaps emerge during weekends and holidays when US custodians suspend transactions.
Friday's partial closure in the run-up to the holiday amplified these gaps. Without synchronised clearing or settlement, even small sell orders can turn into mechanical spirals of settlement on perpetual futures.
Macroeconomic Shock: Trump's Duties Unleash a "Risk-Off" Chain Reaction"
The timing of the collapse was not coincidental. Markets were already jittery when President US President Donald Trump surprisingly announced a 100 % tariff on Chinese imports, citing Beijing's export restrictions on rare earths - crucial materials for semiconductor production.
His post on Truth Social came just as the US Friday session thinned out due to the upcoming bank holidays. Bitcoin, now considered a risk asset sensitive to macro factors since spot ETFs were approved, reacted immediately by slipping below $110,000 within hours.
The political shock triggered a domino effect in leveraged crypto markets, where liquidity was already strained.
The Data: $20 Billion in Liquidations on Major Exchanges
The CEO of Crypto.com, Kris Marszalek, publicly called on regulators to investigate whether some exchanges had "slowed down or misvalued assets" during the crash, raising questions about fairness and compliance checks.
While accusations were flying on social media, on-chain forensics told a more subtle story.
Mefai's On-Chain Autopsy: Coinbase, not Binance, Moved First
Analysis firm Meta Financial AI (Mefai) has published a detailed reconstruction of the sell-off, identifying Coinbase as the first major player to have moved large amounts of Bitcoin before the collapse.
His investigation found:
Mefai also pointed to Wintermute, a London-based market maker, as a key catalyst for liquidity: profit-driven, active on multiple exchanges and often the first to exploit volatility gaps. Its presence, Mefai argues, amplified the cascade of liquidations rather than causing it.
Liquidity Architecture: How a $16 thousand drop became a system shock
The chain reaction was fuelled by liquidity leverage and interdependence. Almost every large altcoin maintains an order book coupled with BTC, meaning that the collapse of Bitcoin automatically revalued the entire market.
When the price of BTC dropped by $20k in a matter of minutes, algorithmic trading systems triggered mass sales on multiple pairs. Buying books emptied faster than market makers could replenish them.
In a matter of minutes, automated hedging systems were overwhelmed - not by manipulation, but by the sheer speed of cascading liquidations.
Bitcoin Price Perspectives: Key Levels to Monitor
At the time of publication:
The pattern is reminiscent of double resistance (double-top) at $125 thousand, a technical configuration that often anticipates a medium-term consolidation phase.
What To Expect: Lessons in the Era of Always-Open Markets
Crypto traders have been known to look for culprits: Trump's tweet, Binance's servers, the "market makers". But, when the dust settles, the lesson is easier.
The era of Bitcoin ETFs has merged the liquidity expectations of Wall Street with the 24/7 risk of the crypto world. When liquidity dries up, both systems cave in at their weakest points: the over-indebted and the over-confident.
Mefai's final warning was direct:
For traders, the old rule still applies: don't trust the calm. Use a stop-loss.
Friday's crash was not a conspiracy; it was a test of liquidity in a system already strained between leverage, automation and political tremors. Bitcoin may stay above $110,000, but the psychological damage remains.
The world's most decentralised asset has just learned another lesson in centralisation:
When macro chaos strikes, there is no truly safe haven - not even on the blockchain.
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