1. Overview

Between October 10–11, 2025, the global cryptocurrency market experienced intense volatility as multiple negative factors converged.

According to CoinGlass data, approximately USD 19–20 billion worth of leveraged positions were liquidated within 24 hours, which some analysts described as “the largest liquidation event in crypto history.”

Bitcoin briefly fell below USD 110,000, dropping around 10% in a single day, while Ethena’s USDe temporarily depegged to USD 0.65 on Binance before recovering.

This historic sell-off not only set new records but also exposed the vulnerabilities of the market’s leverage dynamics and liquidity structure.

Term Tip: Liquidation refers to the process in which a leveraged trader’s position is automatically closed by the system once losses exceed the margin, to prevent further losses.

2. Triggers and Chain Reactions

Macro Shock: Policy-Driven Sell-Off

The U.S. announced new tariffs on Chinese imports, triggering a global risk-off wave.

Crypto, being one of the most volatile asset classes, was hit hardest as capital rapidly exited the market.

Leverage Build-Up: The Downside of Artificial Prosperity

During the rally phase, investors amplified positions via perpetual futures, margin borrowing, and looping strategies.

Once prices broke key supports, open interest collapsed, with more than $19 billion liquidated within a day.

Liquidity Imbalance: Concentrated Market Making

Since 2024, major market makers — including Jump Crypto — have reduced exposure, concentrating liquidity in top pairs like BTC and ETH.

During panic selling, smaller altcoins faced severe order book thinning and flash crashes.

USDe Depeg: The Looping Risk Chain

Some investors minted USDe by collateralizing ETH and repeatedly looping deposits to earn yield.

The strategy amplified gains in bullish markets but magnified risk in downturns.

When collateral values fell and margin ratios deteriorated, USDe faced mass liquidations, temporarily depegging to $0.65 before recovery.

3. ADL (Auto-Deleveraging): The Market’s Safety Valve

Mechanism

When losing positions are fully wiped out and insurance funds can’t absorb the loss, the system triggers ADL (Auto-Deleveraging) —

automatically reducing profitable positions to rebalance the market.

It acts as the final safeguard for market stability.

Analogy

ADL is like a ship taking on water.

To prevent it from sinking, the captain must ask the most profitable passengers to throw some cargo overboard.

It may seem unfair, but it saves the entire vessel.

What Happened During 10·11

• ADL queue warnings appeared on Binance, Bybit, and Hyperliquid.
• DeFi platforms such as GMX and Hyperliquid executed small ADL reductions.
• Major centralized exchanges’ insurance funds absorbed most losses.

 Conclusion:

ADL was not the cause of the crash, but the stabilizing mechanism that followed it.

4. Risk Management Takeaways

The 10·11 crash once again proved:

Risk control is more important than profit pursuit.

Five Key Principles:

• Manage Leverage Prudently
  Use leverage cautiously and ensure your position size matches your risk tolerance.
• Maintain Stop-Loss Discipline
  Set stop-loss levels and position limits in advance to avoid forced liquidation.
• Prioritize Liquidity Quality
  Focus on deep, high-volume markets with solid order book depth.
• Beware of High-Yield Traps
  High returns often imply high risk — understand the mechanism before participating.
• Understand Platform Mechanics
  Learn how liquidation, insurance funds, and ADL triggers work — it’s fundamental to risk management.

5. Conclusion

The “10·11 Crash” was not accidental — it was the inevitable unwinding of an over-leveraged market.

It brought the industry back to rationality and reminded traders that

the real winners are those who manage risk, not those who chase price.

Staying composed and disciplined through volatility is the key to survival.