Sometimes even the most optimistic crypto traders face the harsh laws of the market. October 10, 2025, was exactly such a day — a moment of sobering up. Leverage turned into a trap, liquidity evaporated, and even seasoned players watched as their screens turned red while billions disappeared from the market.
Analysis of the October crash: how the market collapsed in an hour
The start of the crash was the result of an explosive mix — headlines about rates, escalating trade conflicts, and a general flight from risk triggered a chain reaction. In just one hour, Bitcoin plunged by 13%, and altcoins suffered even more painful drops. Some, like ATOM, on illiquid platforms, fell almost to zero before partially recovering.
The total damage — more than $20 billion in liquidated leveraged positions. Both centralized and decentralized exchanges were hit. According to Bitwise portfolio manager Jonathan Mann, this is the largest “blowup” in the history of the crypto market.
And it wasn’t a gradual slide — the market was simply wiped out. A week-long rally, overheated expectations, and huge open interest evaporated overnight. More than $65 billion OI left the system — the market returned to where it was several months ago.
The main blow hit experienced traders
You might expect to hear “newbies got hurt again.” But as Scott Melker (The Wolf of All Streets) notes, this isn’t the case — and many analysts agree with him.
“These were not retail investors. The liquidations hit leveraged traders on decentralized exchanges. As always… it hurts, but this wasn’t a newbie wipeout. This was a blow to the most committed market participants,” he wrote.
And the numbers confirm it. Newcomers are now mostly buying spot and large ETFs — they are barely exposed to DeFi and leverage risks. Those who suffered the most were holding high-leverage perpetual futures.
Why the damage was so extensive
The reason lies in the very structure of the crypto market — as Jonathan Mann explained in detail in his analysis. Futures are a zero-sum game: if one side loses more than it can cover, the whole system feels the strain.
Under normal conditions, liquidations and margin calls are absorbed by the market without shocks. But at the peak of volatility, liquidity started to dry up — market makers began to pull back, order books for alts thinned out, and even small trades started moving prices by tens of percent. In some cases, automatic risk reduction (ADL) kicked even profitable traders out of the market.
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Platforms like Hyperliquid, which use on-chain liquidity pools, managed to profit — they bought assets at discounted prices from those who were forcibly liquidated. But for most participants, the day ended in losses: even neutral strategies didn’t help. Slow collateral revaluation and operational risks wiped out balances across the entire market in an instant.
CeFi vs DeFi: two parallel realities
Centralized exchanges took the main hit — avalanche-like liquidations especially battered altcoins. The DeFi sector weathered the crash much more calmly — thanks to strict collateral requirements and built-in asset evaluation mechanisms.
Protocols like Aave and Morpho demanded high-quality collateral and protected the stability of stablecoins. Thanks to this, stability was maintained in the DeFi market. Though there were still problems — the price of USDe on some centralized platforms dropped to $0.65. Those who used it as margin collateral were quickly liquidated.
Due to price gaps, sometimes up to $300 between different exchanges, rare arbitrage opportunities opened up, which only the fastest managed to exploit.
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The crypto market lost over $20 billion, but spot demand remained stable. After extreme drops, prices began to recover. As Jonathan Mann noted, it was operational readiness and liquidity management, not market direction, that determined who survived this storm.
Bitwise CEO Hunter Horsley added:
“One of the biggest liquidations in Bitcoin history — and it only dropped 15%. That’s a sign of strength. This train can’t be stopped anymore.”
Yes, the market remains volatile and is increasingly dependent on the global agenda. But it’s precisely these shocks that restore balance and remind us that leverage is high risk.
