Following a historic liquidation event in the cryptocurrency markets last Friday, investors are preparing for continued volatility and potential declines in major digital currencies like bitcoin and ether. The turmoil resulted in over $19 billion in liquidations as panic selling and low liquidity spurred drastic market movements. This unprecedented drop coincided with U.S. President Donald Trump’s announcement of a 100% tariff on Chinese imports and indications of future export controls on essential software.
Market analysts have described this liquidation as the most significant in the history of cryptocurrencies, far exceeding previous downturns, including the February 2025 crash and the FTX collapse in November 2022. Bitcoin plunged to as low as $104,782.88 during the tumultuous period, marking a more than 14% decrease from its peak at $122,574.46 on Friday. It managed a slight recovery, trading up 0.6% at approximately $115,718.13. The cryptocurrency had reached a record high of over $126,000 on October 6.
Ether, the second-biggest digital currency, experienced a steep decline of 12.2%, hitting a low of $3,436.29 Friday before rebounding to around $4,254, a 2.4% increase on the day. Additionally, alternative coins suffered even greater losses, with HYPE plummeting 54%, DOGE down 62%, and AVAX crashing by 70%.
Remarks from Trump over the weekend, where he softened his stance on China by stating that “it will all be fine,” contributed to a slight recovery in the crypto market. China responded by blaming the U.S. for the escalating tensions but did not announce any additional countermeasures.
Market volatility surged, with Sean Dawson, head of research at Derive.xyz, noting that the sentiment reflected increasing fears of further downturns. He remarked that all types of options experienced heightened volatility, indicating a general anxiety among traders.
Data collected by Derive.xyz revealed a surge in “put” options for bitcoin and ether, signaling a prevailing inclination among traders to hedge against further downside risks. Notably, there were substantial purchases of puts giving the right to sell bitcoin at strike prices of $115,000 and $95,000, due to expire on October 31. A significant shift from call buying to call selling at the $125,000 strike for October 17 further highlighted a bearish outlook.
For ether, traders focused on the $4,000 strike for the same October 31 expiry and the $3,600 strike for October 17. Additionally, considerable buying activity for $2,600 puts expiring on December 26 pointed to growing bearish sentiment through the end of the year.
Despite the turbulence, renowned on-chain analyst Willy Woo emphasized that bitcoin investor flows have remained relatively stable, suggesting possible resilience against the sharp decline experienced in traditional stock markets. Conversely, Woo observed a significant downturn in ether flows while capital in altcoins may be shifting toward bitcoin, supporting the idea of bitcoin’s status as a “blue-chip” asset in the crypto landscape.
Analyst Nic Puckrin from The Coin Bureau concluded that the recent crash has effectively eliminated excessive leverage and reset market risks for the time being. However, he warned that bitcoin still has substantial hurdles to cross in order to break through key resistance levels necessary for achieving a new all-time high later this year.
