Crypto Market Reels After $19B Liquidation Event

On Friday, October 10, escalating trade tensions between the United States and China triggered a market-wide reaction that culminated in one of cryptocurrency’s most severe pullbacks. Bitcoin plummeted from highs above $126,000 to as low as $101,000 on some exchanges, erasing all gains accumulated over approximately six weeks in a matter of hours. This 18% decline acted as the catalyst for over $19 billion in liquidations, with long positions on Bitcoin and Ethereum bearing the brunt of the damage.

Bitfinex analysts had previously identified the $118,000 level as crucial for Bitcoin due to dense supply clustering in that range. Their prediction that a decline below this threshold would lead to further downside played out dramatically, even exceeding expectations. The total cryptocurrency market capitalization fell by 13.2% within 24 hours to $3.7 trillion, representing roughly $1 trillion in evaporated value. Some altcoins suffered catastrophic losses of 80-90% as order books thinned out and market structure weakened.

The exchange’s analysis revealed that aggressive spot selling across major exchanges in the hour preceding the U.S.-China tariff news contributed significantly to the decline. The resulting imbalance between spot buyers and sellers exacerbated the liquidation cascade, creating what Bitfinex described as a ‘perfect storm’ of market conditions that led to the historic liquidation event.

While the liquidation event set a new record for scale, Bitfinex clarified that Bitcoin’s price decline wasn’t the largest pullback of the current market cycle. The distinguishing factor was the velocity of the plunge, which created extreme moves across multiple altcoins and overwhelmed market participants. The rapid descent left little time for position adjustments or risk management, particularly affecting traders with leveraged long positions.

The market structure weakness became apparent as the imbalance between spot buyers and sellers widened. Bitfinex’s report highlighted how the combination of macroeconomic triggers—specifically the U.S.-China tariff escalation—with technical breakdowns at key support levels created conditions ripe for a cascade. The $118,000 level, once breached, opened the door to further declines that accelerated as stop-loss orders triggered and margin calls mounted.

Despite the severity of the event, Bitfinex analysts noted that the market demonstrated underlying resilience even during the worst of the selling pressure. The fact that Bitcoin’s decline remained within the bounds of previous cycle pullbacks, coupled with the market’s ability to find footing after the initial shock, suggested that fundamental strength persisted beneath the surface volatility.

With the worst of the liquidation event behind them, market participants now face the question of recovery prospects. Bitfinex analysts believe a swift rebound remains possible, particularly given that the event occurred during a period of historical positive seasonality for Bitcoin. However, they emphasize that major crypto assets need to consolidate and establish narrower price channels over several weeks to achieve stability.

The critical threshold for Bitcoin’s recovery lies at the $110,000 level, which needs to be reclaimed and held with sustained spot buying pressure. Failure to regain this level would likely result in a retest of the October 10 lows, potentially extending the market’s recovery timeline. The analysts’ assessment suggests that while the path forward requires careful navigation, the foundation for recovery exists if key technical and fundamental conditions are met.

Bitfinex’s outlook acknowledges the pain inflicted by the historic liquidation event while maintaining that cryptocurrencies still possess the potential to deliver a positive October for investors. The market’s ability to absorb such a significant shock without completely breaking down provides a measure of confidence, though the road to full recovery will depend on Bitcoin’s ability to consolidate above crucial support levels and rebuild investor confidence through sustained buying pressure.