Black Friday on the Crypto Market: What Really Happened?

On Friday, October 10th, in the evening hours, the cryptocurrency market was shaken to its core. Bitcoin, which had recently been holding above $120,000, dropped by more than 15 percent within just a few hours. Most altcoins fell even more sharply — some lost up to two-thirds of their value. Within just a few dozen minutes, approximately $19 billion in liquidations (derivatives) were wiped from the market, causing one of the largest flash crashes in crypto history. At the same time, the total cryptocurrency market capitalization fell by over $500 billion, although a significant portion of this loss has already been recovered.

Corrections are a common part of the crypto market, but this time the drop felt different — sharper, deeper, and accompanied by a chain reaction that revealed just how fragile the market can be in times of panic.

What Caused Such a Sharp Correction?

The avalanche was triggered by news from the U.S., where Donald Trump announced on his platform Truth Social a 100% tariff on all Chinese imports effective November 1, along with new export restrictions on critical software. This announcement came in response to China’s restrictions on the export of rare earth elements, sparking fears of an escalating trade war between the U.S. and China.

The news immediately created tension in financial markets, with investors initially fleeing from risky assets. Cryptocurrencies, traditionally the most sensitive to global macroeconomic news, came under enormous pressure.

In reaction, Bitcoin fell in less than an hour from $117,000 to a local low of $102,000 on some exchanges — a 12% drop in under an hour. The second-largest cryptocurrency, Ethereum, dropped from $4,100 to $3,378, a decline of more than 15%. This caused massive panic across the market, with other cryptocurrencies reacting even more sharply.

Cardano (ADA) fell from $0.78 to $0.27 (-65%), while Ripple (XRP) briefly dropped from $2.70 to $1.22 (-55%). However, these declines were very short-lived, as strong buying demand at these levels quickly pushed prices back up.

Figure 1: This is what the cryptocurrency market looked like for a while.

Source: x.com/AshCryptoReal

By the time the news began to spread, the markets were already under immense tension. After several weeks of growth, a large number of highly leveraged positions had accumulated — traders who had borrowed capital to maximize profits from rising prices. Such an environment, combined with leveraged trading, is extremely sensitive — it takes just one sharp price movement to trigger a massive cascade of liquidations.

Cascade of Liquidations and Exchange Issues

The largest portion of losses for investors came from a cascade of liquidations. In leveraged trading, even a small price movement can push a position into the liquidation zone. Sharp price swings can force positions to the point of automatic liquidation, where the exchange closes the trade because the position no longer has sufficient funds to operate — adding even more selling pressure to the market.

On Friday, this mechanism went into overdrive. Prices fell so quickly that exchange algorithms couldn’t keep up. Some smaller platforms even temporarily displayed incorrect prices, and certain altcoins appeared with a value of zero. This further intensified the panic, as traders were unsure of what was actually happening. On the largest exchanges, trading was virtually impossible for tens of minutes, as systems were heavily overloaded and asset prices jumped by percentages within seconds.

For these reasons, Fumbi does not offer high-risk leveraged trading and recommends long-term direct investment in crypto assets rather than purchasing securities linked to them. Fumbi clients were completely unaffected, and trading on our platform continued without any interruptions.

To make matters worse, the volume of derivatives liquidations reached a new record — within just a few hours, over $19 billion in derivatives positions were liquidated, several times more than during the FTX crisis. Friday’s liquidations on derivatives markets were even 15 times larger than at the start of the COVID-19 pandemic. This marks the largest 24-hour capital liquidation in crypto history. According to available data, more than 1.6 million traders were affected, with 96% of liquidated trades being long positions (bets on price increases).

Figure 2: Comparison of liquidations

Source: x.com/AshCryptoReal

The Market Cleans Itself

After one of the most dramatic days in the history of the cryptocurrency market, the market gradually began to stabilize. Investors who had been holding capital on the sidelines started taking advantage of the low prices to buy, helping to trigger at least a partial market recovery. Bitcoin bounced off the bottom and, as of October 13, 2025, is trading at $115,000, down roughly 6% over the past seven days. The total cryptocurrency market capitalization is slowly but steadily approaching $4 trillion again.

Many analysts consider Friday’s events a classic market cleansing. When too much speculative capital accumulates and the market becomes over-leveraged, a natural and healthy correction occurs — impatient investors are forced to close their trades, and excessive leveraged positions are liquidated.

This event once again showed that Bitcoin, as the largest and most liquid cryptocurrency, is far more resilient to sharp declines than most other altcoins. It confirms that in times of crisis, investors view BTC as a safer haven compared to other cryptocurrencies — much like traditional investors turn to gold during periods of uncertainty.

Fear & Greed at Its Lowest Since April

The Crypto Fear & Greed Index reached 24 points on Sunday, October 12, 2025, signaling a return to the fear zone. This is the lowest level of the index since April 2025, showing that investor sentiment shifted dramatically after Friday’s crash.

Just last week, the index was at 74 points, signaling the greed zone. This again illustrates how quickly investor sentiment can change in the market. Historically, however, periods of high fear have often proven to be the best long-term buying opportunities. When the majority of the market panics, patient investors use the lower prices to expand their positions. As the history of Bitcoin and the broader crypto market shows, every period of fear is typically followed by a phase of renewed confidence and growth.

Source: Fear & Greed Index

Impact on Investors and How to Protect Yourself

For many investors, Friday’s crash was an unpleasant wake-up call. Those who relied on short-term speculation or held high-leverage positions suffered the largest losses. On the other hand, experienced investors saw it as an opportunity to buy more assets and expand their investment portfolios.

Flash crash events serve as a reminder that having a plan in the crypto market is essential. Instead of trying to time the market, investors should focus on regular investing, diversification across different cryptocurrencies, and a long-term horizon. It is also important to set up protective mechanisms, such as Take Profit and Stop Loss functions, which automatically safeguard investments from sharp price swings. Another useful tool is the Limit Buy Order, which allows you to purchase cryptocurrencies at a specific price lower than the current market value.

Another highly effective strategy is investing through managed portfolios, which automatically track the market and balance risk. This approach allows investors to remain calm during market turbulence and focus on their long-term goal — growing capital without constantly monitoring prices.

Friday’s crash can therefore serve as a valuable lesson: the crypto market moves fast, but it rewards those who think ahead, protect their positions, and invest wisely.

TAKE ADVANTAGE OF CRYPTO’S POTENTIAL