Crypto Market Meltdown: Binance Glitch and Trump’s Trade War Trigger Historic $19 Billion Liquidation

Por HuangSenyan

October 2025 marked one of the most turbulent weekends in cryptocurrency history. Multiple factors converged to create a “perfect storm,” triggering the largest single-day liquidation event in the crypto industry, temporarily pushing Bitcoin below $110,000.

Massive Liquidations, but Not Total Losses

On that Friday, roughly $19 billion in leveraged positions were forcibly liquidated. While this may sound catastrophic, investors didn’t lose all this money directly; instead, leveraged positions were automatically closed.

The broader impact is better measured through market capitalization. From Friday to Sunday, total cryptocurrency market value fell from $4.24 trillion to $3.79 trillion, before rebounding to over $4 trillion at the time of writing.

Analysts are still working to understand how macroeconomic shocks, exchange mispricing, and excessive leverage combined to produce this historic liquidation event.

Trump’s Trade War Escalation Sends Global Markets Reeling

On Friday, U.S. President Donald Trump announced a new round of tariffs, threatening 100% duties on Chinese imports starting November 1—or earlier, depending on China’s actions.

The announcement immediately affected traditional markets:

Nasdaq 100 Index dropped 3.49%
S&P 500 fell 2.71%
Dow Jones Industrial Average declined 1.9%

Bitcoin’s volatility outpaced traditional markets, falling 3.93% during regular trading hours and continuing lower after U.S. market close. While the trade war amplified market fear, analysts note it wasn’t the sole driver of the crypto crash.

Binance Oracle Glitch Amplifies the Crash

A more critical factor was Binance’s oracle system malfunctioning, causing the synthetic dollar USDe to momentarily drop to $0.65, far below its pegged value. This triggered massive leveraged liquidations.

Key issues included:

Binance’s pricing relied on its own spot order books for assets like USDe, wBETH, BNSOL
Prices rapidly propagated to other exchanges and decentralized platforms (DEXs)
Collateral values appeared lower than reality, sparking a cascade of forced liquidations

Interestingly, USDe remained stable on other platforms, such as Curve, showing a deviation of less than 0.3%, indicating the issue was specific to Binance’s pricing mechanism.

In response, Binance stated that core trading engines and APIs remained operational, attributing much of the volatility to overall market conditions. The exchange also announced $283 million in compensation to affected customers. Binance Coin (BNB) surged to a record $1,153.15 during this period.

Hyperliquid DEX: Transparency and Resilience in Action

Decentralized exchange Hyperliquid saw the highest number of liquidations during the event. Founder Jeff Yan emphasized:

The liquidations followed system design, not a platform failure
Hyperliquid maintained 100% uptime and zero bad debt
Liquidation workflow: first, attempt to close positions via order book; second, utilize liquidity provider vaults; finally, trigger auto-deleveraging if needed

Hyperliquid’s on-chain transparency highlighted the resilience of well-designed DEX margin systems compared to opaque practices of centralized exchanges.

“Insider Whale” Trades Highlight Market Timing

Data revealed a massive trader opened short positions minutes before Trump’s tariff announcement, earning $192 million.

The same wallet later shorted $163 million of Bitcoin at 10x leverage, generating $3.5 million profit. This timing led the crypto community to dub the trader an “insider whale,” with speculation that these trades may have amplified the $19 billion liquidation cascade.

Key Takeaways

This historic crypto crash underscores the complexity of modern markets:

Macroeconomic shocks – trade war fears rattled global and crypto markets
Exchange-specific risks – Binance’s oracle mispricing triggered cascading liquidations
Leverage danger – excessive leverage magnified losses
DEX resilience – Hyperliquid demonstrated how transparent margin systems can withstand extreme volatility

Investors chasing high returns must remain cautious, carefully monitor exchange risk, and manage leverage exposure. The event highlights that crypto markets are vulnerable not only to external shocks but also to internal system flaws.