- Over $16B in long positions were liquidated during the crypto market sell-off.
- Bitcoin fell below $110K, while Ether briefly dropped 10% in the latest crash.
- The U.S. government shutdown delayed economic data, increasing market uncertainty.
- Ethena’s USDe stablecoin briefly deviated below $1 amid the market volatility.
A sharp sell-off in global markets has triggered massive liquidations in the cryptocurrency sector, wiping out $16 billion in long positions. The wave of liquidations comes after U.S. President Donald Trump’s social media post warning of 100% tariffs on Chinese imports. This announcement set off a chain reaction that extended from traditional markets to digital assets like Bitcoin (BTC) and Ether (ETH), compounding concerns about a potential new chapter in the U.S.-China trade war.
Market Impact and Liquidation Surge
In the wake of President Trump’s post, markets reacted swiftly, with Bitcoin falling below $110,000 and Ether dipping by over 10% during the early hours of October 11. Bitcoin briefly recovered to $113,294, while Ether reached $3,844, but the overall damage was significant. According to CoinGlass, a total of $19.1 billion in crypto liquidations occurred, with approximately $16.7 billion coming from long positions.
The impact was felt across the crypto market, with the total market cap dropping to $3.87 trillion. The forced liquidations occurred at an unprecedented scale, exceeding those seen during previous crashes, including the FTX collapse in 2022 and the global market downturn during the early stages of the COVID-19 pandemic. While the percentage drop may not have been as severe, the dollar value of liquidations surpassed anything seen in recent years.
Derivatives Market and Stablecoin Stress
The sell-off wasn’t limited to Bitcoin and Ether. Other digital assets experienced similar declines, with the overall value of the crypto market plunging sharply. One notable development was the stress observed in the stablecoin market, particularly with Ethena’s USDe. At one point, USDe printed a value of $0.9996, reflecting the volatility that permeated derivatives markets.
Despite this, the Ethena team reassured users that minting and redemptions of USDe remained fully operational. They emphasized that the stablecoin had become more overcollateralized as unrealized gains from short positions began to materialize. This situation highlights the often volatile nature of the crypto market, especially when large-scale liquidations trigger swift price movements.
Broader Market Concerns and Economic Uncertainty
Adding to the market turmoil was the ongoing U.S. government shutdown, which has delayed the release of key economic data. The lack of official indicators further amplified the uncertainty in global markets, leaving traders and investors to navigate in an information vacuum. In addition, the renewed focus on trade war fears, stemming from Trump’s tariff threat, raised concerns about broader economic implications.
The combination of these factors sent shockwaves through traditional and crypto markets alike. As the U.S. administration signals a tougher stance on China, concerns about the impact on global trade and economic growth are expected to continue influencing investor sentiment. These developments suggest that the current volatility may not subside quickly, keeping traders on edge as they brace for further market fluctuations.
Crypto Market Response and Recovery Outlook
Despite the massive liquidations, Bitcoin and Ether managed to recover some of their losses. However, the crypto market remains highly volatile as uncertainty looms over the broader economic landscape. The potential for further escalation in the U.S.-China trade conflict continues to hang over the market, adding another layer of risk for traders and investors.
Given the scale of the sell-off, experts suggest that more caution is needed in the coming days. Although some traders have already begun positioning for a rebound, others remain wary of further downside risks, particularly if global market conditions continue to deteriorate. For now, the crypto market will likely remain highly sensitive to any news related to the ongoing trade war, government shutdown, and broader economic trends.
