What happened?
A surprise announcement that the U.S. would impose 100% tariffs on Chinese imports on Oct. 10 sparked a massive crypto selloff. The shock triggered over $19 billion in forced liquidations and wiped out roughly 1.6 million trader positions, mostly longs. Bitcoin dropped below $105,000 before beginning a quick rebound a few days later.
Who does this affect?
Leveraged traders and derivatives platforms were hit the hardest, with exchanges like Binance, OKX and Bybit facing the bulk of automated margin calls. Retail and institutional traders who ran high-margin positions saw big losses as open interest fell by more than 30%. Spot ETF buyers, market makers and desks that bought the dip also played a role in stabilizing prices during the rebound.
Why does this matter?
The episode shows crypto is now tightly tied to macro policy risk, so headline shocks can quickly cascade through leveraged markets and liquidity pools. Forced liquidations pushed funding rates negative, spiked implied volatility above 50%, and drained liquidity—conditions that make future flash crashes more likely if leverage rebuilds. Even with a rebound and $420 million of spot ETF inflows, markets remain fragile, changing how traders and institutions price and hedge risk.