“This Was Unique”: The Reasons Behind Friday’s Historic Crypto Collapse

It took eight years for Bitcoin to reach $20,000 for the first time. However, on October 10, the leading cryptocurrency fell by $20,000 in just one day.

Friday’s cryptocurrency crash was truly remarkable. There’s little doubt that the downturn was partly instigated by Donald Trump imposing a new 100% tariff on Chinese imports — “in addition to” any existing charges the country is already facing.

Once again, the looming threat of an escalating trade conflict rattled markets, causing the S&P 500 to drop 2.7%. Nonetheless, the effect across the cryptocurrency arena was significantly more severe, as the announcement coincided with low liquidity on Friday afternoons.

BTC experienced a flash crash, plummeting to lows of $104,500 — hitting $102,000 on certain exchanges. ETH’s drop was even more alarming, with a peak-to-trough decline of 21% from $4,390 to $3,460.

Bitcoin (BTC)24h7d30d1yAll time

In monetary terms, this is now being viewed as the largest liquidation event in cryptocurrency history: $19.36 billion in just 24 hours, according to Coinglass data. Long positions were hit the hardest as traders pursuing “Uptober” faced severe repercussions.

The aftermath is still evident across altcoins as well. Although some assets have begun to recover slightly, many smaller cryptocurrencies are still grappling with losses exceeding 20%. Unsurprisingly, so-called “synthetic dollars” like USDe also lost their peg — dropping to 65 cents on the dollar at one point. We haven’t witnessed a correction of this magnitude in quite a while.

Simon Dedic, founder and managing partner of Moonrock Capital, expressed on X that this pullback “felt very different” from earlier crashes — and dismissed the notion that it could have arisen solely from Trump’s tariff threats.

“It genuinely feels like something went seriously awry behind the scenes at Binance or a major market maker, triggering an unprecedented liquidation cascade that erased liquidity across the board and sent some assets plummeting to zero.”

Dedic contended that the reason behind this devastation “was a significant technical issue, not a fundamental one” — suggesting that infrastructure problems were the cause, rather than a sudden loss of faith in Bitcoin’s value.

Indeed, there’s no shortage of individuals on Crypto Twitter who are extremely upset with Binance at this moment. Screenshots have surfaced showing altcoin pairings with USDT crashing by over 90%. Those trying to purchase dips or panic-sell encountered agonizing delays or were unable to finalize their transactions.

Reports indicate there has also been a human toll to all of this. According to The Times of Ukraine, one influencer and entrepreneur took his own life in his Lamborghini — and had discussed financial pressures in an online video. This serves as a crucial reminder to prioritize mental health during market volatility and to never suffer in silence.

As anticipated, on-chain analysts are now suggesting that significant whales worsened the crash — including an old wallet that reportedly made over $200 million in profits in a single day by shorting BTC and ETH. Given Donald Trump’s well-documented connections to the cryptocurrency sector, allegations of insider trading and market manipulation are now echoing across social media. Although these claims are unsubstantiated, it is quite unfortunate and coincidental that the market drop coincided with reports of the president contemplating a pardon for CZ.

Despite Friday’s dramatic decline, there are some who remain hopeful that this is merely a temporary setback — a necessary cleansing of excess and greed before the markets ascend higher as 2025 approaches. Some are urging for perspective, noting how Bitcoin has reverted to prices last seen at the end of September. Others assert that this entire ordeal hasn’t ended the bull run, but rather reignited it.

Reminder on a day like this: the best time to buy BTC has often been when it is being dragged down by broader markets.
Wrote about this a while back: https://t.co/OfRzXYiNGk pic.twitter.com/rPodthBnN9

— Juan Leon (@singularity7x) October 10, 2025

Juan Leon, Bitwise’s senior investment strategist, has shared an article he authored last year, where he claimed that — at least historically — the optimal time to purchase BTC is “when there’s blood in the streets.”

His research, which analyzed a decade spanning from January 2014 to August 2024, investigated how major asset classes performed one year after the S&P 500 experienced a sudden pullback exceeding 2%. While this key index typically rebounded by 23%, the data indicates BTC had generally surged by an astonishing 189%.

Crypto investors are feeling battered, bruised, and overwhelmed with fear. Newcomers, who just days ago were fascinated by BTC after it reached record highs, will be feeling cautious once more. This crash was unprecedented, and it may take time for the market to recover its composure.

The post ‘This Felt Different’: Why Friday’s Crypto Crash Made History appeared first on Cryptonews.