A Record-Breaking Crypto Meltdown
The crypto market has staged a sharp rebound after suffering the largest single-day liquidation event in history, triggered by an abrupt tariff escalation announcement from U.S. President Donald Trump.
On Friday, Bitcoin (BTC) plunged from $121,000 to $102,000 within hours, wiping out weeks of gains from its “Uptober” rally. Ethereum (ETH) tumbled to $3,686, while Solana (SOL) dipped just above $173.
In the span of seven hours, nearly $7 billion in positions were liquidated, with $5.5 billion coming from long positions, said Sean Dawson, head of research at Dervie.
By day’s end, the total carnage reached an astonishing $20 billion, including $16.7 billion in longs.
Tariff Shock Sends Markets Tumbling
The panic sell-off wasn’t limited to crypto. Global stock markets were also dragged down, with the Nasdaq dropping 3.6%, the S&P 500 falling 2.7%, and the Dow Jones sliding 1.9%.
The trigger? Trump’s cancellation of a meeting with Chinese President Xi Jinping and his announcement of a “massive increase in tariffs on Chinese imports,” which he admitted could be “potentially painful” for U.S. consumers.
Beijing responded by tightening restrictions on rare earth exports, briefly spooking global traders and sparking fears of another U.S.–China trade war escalation.
But by the weekend, China signaled a softer stance, helping markets stabilize as analysts described Friday’s rout as a “geopolitical overreaction.”
Relief Rally Driven by Short-Covering
By Sunday, Bitcoin had recovered 5%, climbing back above $115,000, while Ethereum surged 10.5% to $4,138.
“Ethereum’s 11% surge is pure short-covering and mean reversion after the market overreacted to Trump’s tariff bombshell.”
Serroni noted that the derivatives market had been overextended, with “thin selling pressure and high leverage” amplifying the collapse before traders moved in to cover short positions.
Altcoins Join the Recovery
Major altcoins have also bounced back strongly. Solana (SOL) is up 12%, BNB climbed 16.5%, and Dogecoin (DOGE) gained 11.4% as investors returned to riskier assets amid easing tensions.
Analysts say the rebound shows underlying market resilience, suggesting the sell-off was more about panic than fundamentals.
Despite the dramatic week, on-chain data shows open interest and funding rates have largely reset - a sign that markets may now stabilize and rebuild momentum heading into mid-October.
The Bigger Picture
Friday’s crash will likely be remembered as a stress test for overleveraged traders, with cascading liquidations exposing fragile positions across centralized and DeFi platforms alike.
Yet the market’s swift rebound underscores renewed investor confidence, especially as macro headwinds like inflation and trade tensions continue to shape volatility.
For now, the crypto bulls are back, proving once again that in digital markets, panic is temporary - but resilience is structural.
