At the time of writing, Bitcoin is trading around $115,300, up 3.1% from the previous day. Ethereum has risen even stronger — by 8.7%, reaching $4,170.
The collapse was triggered by rumors of a possible “misunderstanding” between U.S. President Donald Trump and Chinese President Xi Jinping. The Republican leader, known for his unpredictable trade policy, sparked panic by threatening to impose additional tariffs of up to 100% on Chinese imports after Beijing limited exports of rare earth metals.
Nevertheless, the situation appears less dramatic than initially feared. According to recent reports, China does not plan a full export ban, while the White House has issued conciliatory statements. Meanwhile, the market saw approximately $16.7 billion in long positions liquidated.
According to CNN, Donald Trump told reporters aboard Air Force One that Xi Jinping is “a great leader” and that they “have a wonderful relationship.” However, Beijing warned on Sunday that it would respond with countermeasures if the U.S. president follows through with the new tariffs.
Flash Crash on the Crypto Market — What Really Happened
Beyond the headlines, the technical aspects of the crash deserve closer attention. While Trump’s comments and the tariff scare shaped the overall sentiment, it was the internal market dynamics that left thousands of traders waking up with wiped-out balances.
First, analysts noted unusual activity from Wintermute — a market maker closely linked to Binance. Within hours, roughly $700 million was transferred to the exchange, including about $200 million in Bitcoin. Such large inflows during periods of volatility can significantly impact liquidity and market depth.
Second, as cryptocurrencies declined in sync with equities, large buy and sell walls disappeared from order books. This absence of liquidity accelerated selling pressure — hourly candles showed up to 12,000 BTC traded, with some single-minute candles exceeding 1,000 BTC. This all occurred on the spot market, which typically experiences lower volatility, underlining the severity of the move.
As prices fell toward $108,000, a cascade of liquidations was triggered — a chain reaction where forced position closures amplified the downward spiral. Market makers seemingly removed support orders, allowing prices to free-fall; as a result, some futures contracts, including ATOM, briefly dropped to zero.
These factors indicate that the flash crash was not merely a reaction to external news, but a result of compounded technical and behavioral imbalances — from large market maker actions to liquidation mechanics across major exchanges.
The most controversial part, however, was how Binance handled the event. Many users reported that during the sharpest volatility, order execution buttons (maker/taker) were not functioning — while forced liquidation still worked. The exchange later attributed this to “technical issues” within its infrastructure.
To illustrate: imagine a trader holding a long position with x50 leverage and a 1% stop-loss on cross-margin. When the market drops 50% and the stop fails, the position is liquidated entirely. That equates to a 2,500% loss on the account. Two such positions — and the losses exceed 5,000%, effectively wiping the balance. Instead of a controlled stop, the trader’s portfolio sells out at market price, fueling even more selling pressure and liquidation cascades.
This combination of factors likely explains the losses suffered by several well-known traders and copy-trade accounts — including those linked to Hamaha and other public figures, though official confirmation is lacking.
The chaos was compounded by arbitrage bots operating across exchanges. Normally, they stabilize prices, but amid Binance’s collapse, many began shorting and selling on other exchanges where prices remained higher, adding more downward pressure.
Further stress came from lending and derivatives platforms, where falling asset values triggered mass liquidations. With altcoins down roughly 50%, all positions leveraged above x2 were forcefully closed. As a result, thousands of traders lost their deposits, while several funds and projects reported major losses — many confirmed by user screenshots and social posts.
Ultimately, the crash was not just the outcome of external events but a full-scale stress test of crypto infrastructure — from exchange servers to automated trading systems. It exposed how fragile even top-tier platforms can be when technical failures and behavioral panic overlap during extreme volatility.
Despite the weekend turmoil, the so-called “Uptober” uptrend remains intact. Buyers continue to buy the dips, said Vincent Liu, CIO at Kronos Research, in a comment to The Block. Risk appetite among traders appears to be returning after the initial wave of panic.
Binance Coin (BNB) has been a standout, surpassing XRP and USDT by market capitalization and trading near $1,300. The rise is fueled by Binance’s derivatives volume reaching $2.55 trillion and its spot market share climbing to 41.5%.
🟢 Crypto Market Update: Bitcoin and Ethereum are back in bullish mode, showing strong recovery after one of the biggest sell-offs in recent years.