1011 Cryptocurrency Tragedy: Single-Day Liquidation of 19.1 Billion USD, the Darkest Moment in History Has Arrived!
1011 Cryptocurrency Tragedy: Single-Day Liquidation of 19.1 Billion USD, the Darkest Moment in History Has Arrived! (In-depth analysis, recommended to read patiently)
Sino-American trade friction suddenly escalates, Trump announces that on November 1, he will impose a 100% tariff on China, while restricting the export of software, chips, and other products. This news directly triggered violent fluctuations in the global financial market. The S&P 500 index evaporated about 700 billion USD in market value within just 3 minutes after the announcement, closing with a drop of 2.71%; the Nasdaq index plunged even more, down 3.5%. For the cryptocurrency world, this storm has just begun...
The crash in the cryptocurrency market began around 5 AM on October 11th Beijing time. Bitcoin fell sharply without resistance within 30 minutes, with an average drop of nearly 1% per minute, and at extreme moments, it plummeted over 4% in a single minute (about $5000), with the maximum drop reaching 17% and the lowest price once dipping to $102,000. This speed and magnitude of decline quickly triggered a chain reaction: ETH fell to as low as $3400, while mainstream altcoins like XRP and DOGE dropped by more than 30%!
Perhaps someone will ask, how can a tariff policy have such a huge impact on the cryptocurrency market? Let's sort out the logic behind it:
The U.S. government shutdown combined with unclear Federal Reserve policies has already put market confidence in a fragile state;
The new tariff policy further deteriorated the sentiment in the U.S. stock market, leading risk investors to sell off assets to recover funds due to concerns over rising inflation and economic recession;
The demand for capital preservation has heated up, which in turn has pushed the three major U.S. stock indices to continue to decline, forming a negative cycle;
The cryptocurrency market has always had a certain correlation with the U.S. stock market, and its volatility is much greater than that of the U.S. stock market. The sharp drop in the U.S. stock market directly ignited panic in the cryptocurrency market;
The sharp drop in token prices triggered a large number of high-leverage accounts to be liquidated, leading to a chain reaction of liquidations;
The wave of liquidations triggered a stampede-like exit, causing the liquidity of exchanges to quickly dry up, and the pressure on investors to redeem stablecoins surged;
The sudden reduction in liquidity further exacerbated market panic, accelerating selling pressure, ultimately leading to a dramatic drop in cryptocurrency prices.
But looking beyond the surface to the essence: this sharp decline is a short-term shock caused by unexpected external political events, rather than a fundamental drop due to the collapse of the intrinsic value of cryptocurrencies.
Speaking of this, a familiar feeling arises - although there have been fluctuations in the cryptocurrency market in recent months, the overall trend has been upwards. Everyone has gradually forgotten the risks after initially being wary of 'black swans.' However, regardless of market sentiment, 'black swans' never completely disappear; they will always come when the time is right. Looking back at the famous 'black swan' events in the history of the cryptocurrency market:
Mentougou event, Bitcoin plummeted by 80%;
94 event, Bitcoin fell by nearly 50%;
312 event, Bitcoin fell by nearly 50%;
519 event, Bitcoin fell by nearly 40%;
The subsequent LUNA collapse and FTX explosion also saw Bitcoin dropping around 40%.
Looking at this 1011 event, the maximum drop in Bitcoin was only 17%. An obvious fact stands before us: in the face of 'black swan' events, Bitcoin's decline is gradually narrowing. This reflects the increasing maturity of the cryptocurrency market - even when facing the direct impact of 'black swans,' although there will still be growing pains, the ability to withstand risks has been strengthening.
Was this crash really without warning? Not at all. Before the trade war news broke, the cryptocurrency market was already in a high-leverage state. There were 'whales' who opened short positions of up to $1.1 billion on the Hyperliquid platform before the crash, which was actually a clear risk signal, but most investors did not pay attention at the time, even treating it as a mere curiosity. The dramatic result of the crash: some woke up to find their assets significantly appreciated (A8A9 refers to assets reaching tens of millions or billions), while others lost all positions in their sleep, waking up feeling like it was an unreal nightmare...
Since I have always focused on spot trading, this crash, while shocking, did not deal a heavy blow to me. Rather than panic, I prefer to think optimistically: how to find potential opportunities in this crash. Here are my views and judgments, intended for discussion only and not constituting any investment advice:
Looking back at the history of 'black swan' events in the cryptocurrency market, not only has the decline in Bitcoin narrowed, but the time required for market recovery has also shown a shortening trend. We have every reason to expect that after this drop, the market can quickly adjust, and historical experience shows that after each crash, the market often welcomes a rebound to a higher level;
Bitcoin's recent crash saw a minimum dip to $102,000. If effective support can be established around this price level, the downward momentum may be expected to slow down;
Before the crash, Bitcoin had just set a historical high of $126,200, and institutions were injecting $5.67 billion into the market weekly through ETPs (exchange-traded products). These fundamental factors supporting the market were not completely altered by short-term shocks;
If the situation of the China-U.S. trade war does not worsen further, the cryptocurrency market is expected to find a new upward starting point before the end of the year.
In the short term, compared to chasing profits, protecting the principal is the top priority. It is essential to remain calm and avoid panic operations - one must know that the most expensive mistakes during 'black swan' events often occur when cutting losses at the market's lowest point.
This is only the first day of the 'black swan' arrival; the market may still experience a difficult period of fluctuations in the following days. If there are new market changes later, I will continue to share my analysis. But here, I want to remind everyone: the value of cryptocurrencies has long been recognized by the market, and even if this investment suffers setbacks, it does not mean your cryptocurrency career is over. Temporary losses are not frightening; what matters is to learn from this volatility, adjust your mindset, and prepare for future market opportunities.
