Featured: Cryptocurrency Market Crashes Overnight, Blood Flows Like Rivers, What's the Reason?

10.11 Cryptocurrency Black Swan Reappears, Waking Up in the Morning Unable to Believe One's Eyes, Many Altcoins Dropped 60%-90% Overnight, Some Even Fell Over 99%; Exchanges Crashed, and Some Token Prices Were Displayed as 0.

Take a Few Examples of Major Altcoins with Large Market Caps: SUI, which had been around $3.5 for Several Days, Plunged to $0.55 in One Go; WLD, an AI Leader, Dropped from $1.4 to $0.26 in One Go; Even Dogecoin, Which Was Among the Top Ten by Market Cap, Fell 50%, and FIL, Once a Star Project, Dropped from $2.5 to $0.3.

Historic Largest Liquidation

That's Why It's Called a Black Swan—The Severity of the Drop and the Timing Far Exceeded Most People's Expectations, Even Some Experts Had Seen the Risk Signals Earlier. Therefore, If You Haven't Been Liquidated, It's Already a Blessing. Although Some People on Twitter Claimed They Won Big, This Is Merely Survivorship Bias.

Looking at the Futures Data, It Created a Historic Moment in the Crypto World. The Total Liquidation Amount Reached $19.141 Billion in the Past 24 Hours, Affecting 1.62 Million Traders Globally. Long Positions Were Liquidated for $16.686 Billion, With the Largest Single Liquidation Occurring on the ETH-USDT Futures Pair on Hyperliquid Platform, Worth $203 Million.

Previously, the 519 Event Caused 580,000 Traders to Be Liquidated, with a Total Liquidation Value of $7 Billion.

This Epic Drop Suddenly Erupted, What Caused It? Although the US Stock Market Dropped Last Night, the Decline Was Relatively Controllable, While Crypto Experienced a Catastrophic Crash. There Must Be Other Internal Reasons Specific to the Crypto Sector.

Trigger: Trump Tariffs

Last Night, the President of the United States Suddenly Announced That the US Would Impose a 100% Tariff on China Starting November 1st.

Sino-US Trade Tensions Escalated Suddenly, Putting Immediate Pressure on Global Risk Assets. Risk-Off Sentiment Increased Dramatically, Capital Fled to the Dollar and U.S. Treasuries, While Cryptocurrencies, as Representatives of Risk Assets, Became the First Targets for Selling.

This Became the First Straw That Broke the Camel's Back. The Three Major U.S. Indices All Dropped Sharply, with the Nasdaq Falling Over 3%, Its Largest Single-Day Drop Since April; Major Tech Stocks in the U.S. Suffered Heavy Losses. European Markets Also Dropped Sharp at the End of the Day, Along with Crude Oil and Cryptocurrencies, with WTI Crude Oil Falling Over 4%, and the VIX Volatility Index Surging Over 31%.

Hidden Risks in the National Day Short-Squeeze, Excessive Leverage, and USDE Depegging Increased Market Vulnerability

Over Recent Months, Bitcoin and Mainstream Assets Frequently Set New Records, But the Funds Behind These Records Were Not Long-Term Capital, But Rather Leveraged Capital Accumulated Through Futures Trading, Lending, and Liquidity Mining. Once Negative News Emerged, These High-Leverage Long Positions Were the First to Be Hit. Once Support Levels Were Broken, Forced Liquidations Would Trigger Continuously, Increasing Selling Pressure and Leading the Market into a Chain Reaction of "Longs Killing Longs" Liquidations.

Arthur Hayes Posted on Social Media That Rumors Suggest That Automatic Collateral Liquidation on Cross-Margin Positions on Large Centralized Exchanges Contributed to the Extreme Market Drop.

The Most Representative Case May Be USDe. Since the Official Launch of the 12% Subsidy Policy, It Attracted a Large Number of Users to Participate in Cycle Lending for Arbitrage. This Mechanism Was Highly Attractive in a Bull Market, Attracting Massive Funds in a Short Time, Becoming a Key Driver of Market Prosperity. However, On October 11, During the Market Sell-Off Caused by the Tariff Shock, USDe Experienced a Significant Depegging, Dropping Below $0.66 in a Short Time, Becoming a Symbolic Event of This Market Crash.

Market Maker Liquidity Collapse

Greeks.live Staff Member Da Laoshi Bugsbunny Analyzed That Currently, Active Market Makers Have Limited Funds and Focus Their Main Liquidity Resources on Tier0 and Tier1 Projects, Such as BTC and ETH, Providing Only Minimal Support for Mid-Tail Altcoins.

After the Collapse of Jump, The Market's Liquidity Supply Relied More on These Active MM, But They Lack Comprehensive Tail Risk Hedging Mechanisms, Covering Only Daily Conditions. In Extreme Situations, Their Funds Were Simply Insufficient to Stabilize the Market. When the Trump Tariff News Triggered Market Panic, Market Makers Had to Prioritize Ensuring the Safety of Major Projects, Pulling Funds Originally Allocated to Small Coins. As a Result, The Altcoin Market Lost Its Counterparties Completely, Leading to Unchecked Selling Pressure and Near-Free-Fall Price Drops.

IOTX and Other Tokens Dropped Nearly to Zero, Illustrating the Most Direct Manifestation of Liquidity Exhaustion.

In Fact, With the Large Number of New Projects This Year, Active MM Funds Have Been Overloaded, and the Market Lacks Sufficient Derivatives to Hedge Tail Risk. This Time Was Simply the Final Unveiling of the Cover-Up.

Bugsbunny Believes a More Critical Factor Was That This Drop Occurred on Friday Night (Saturday Morning in Asia), and Both European, American, and Asian Market Makers Have Clear Working Hours. If This Had Happened During Trading Hours on a Weekday, Liquidity Might Have Been Restored Earlier.

Overall, This Black Swan Had Both Macro-Level Factors, Such as Trump's Sudden Policy, and Internal Issues Like Excessive Leverage Leading to Market Fragility. Additionally, Due to the Sharp Increase in Altcoins This Year, Market Makers Could Not Handle the Tremendous Liquidity Demand for These Altcoins, Leading to Rapid Market Collapse.

All We Can Do Is Implement Proper Risk Management. The Market Will Never Lack Black Swans, And Only by Respecting the Market Can One Survive in the Long Term.