- A record $19 billion in crypto assets were liquidated during the market crash on October 10.
- The event led to a $65 billion drop in open interest, surpassing previous notable liquidations.
- Investigators linked the incident to vulnerable pricing methods for certain tokens on Binance.
- Significant liquidity was removed from the USDE/USDT pair, causing sharp price drops and forced sell-offs.
- Early warning signs were detected by anomaly detection tools before the crash fully unfolded.
On October 10, the global cryptocurrency market faced its largest single-day liquidation event. The crash resulted in over $19 billion being liquidated and a sharp $65 billion decline in total open interest, impacting traders and exchanges worldwide.
According to data from CoinGlass, the scale of liquidations exceeded previous records, including those seen during the COVID-19 market crash and the collapse of FTX. Investigators identified that the collateral value of three pegged crypto tokens—USDE, bnSOL, and wBETH—was determined using Binance’s internal order book rather than external pricing oracles. This method put some users, particularly those utilizing Binance’s “Unified Accounts” feature, at risk during periods of market stress.
During the crash, activity in the USDE/USDT pair on Binance saw average liquidity drop by almost 74%, falling from about $89 million to $23 million within minutes. By 21:54 UTC, available liquidity was just $2 million, and trading volumes surged nearly 900 times their normal rate. As a result, the price of USDE fell as low as $0.68 on Binance, even as it held steady near its pegged value on other exchanges. Most trades during this period were forced sales from panicked investors and stop-loss triggers.
Rena Labs, a market analytics firm, detected more than two dozen market anomalies before the crash. Their system observed unusual spikes in volume, price changes, and order activity patterns that typically signal abnormal trading behaviors, including the withdrawal of buy-side liquidity. This sudden lack of market depth exposed the fragility and high leverage still present in many crypto markets.
This event highlights the risks linked with insufficient liquidity and internal pricing mechanisms in crypto trading. While assets like USDE, bnSOL, and wBETH experienced cascading liquidations, the absence of large market makers left many tokens vulnerable to rapid price movements and further losses. The incident serves as a reminder that crypto traders and exchanges must monitor risk and liquidity safeguards to prevent similar disruptions in the future.
For more information on the liquidation data and crypto futures, see CoinGlass and crypto futures data. Detailed data from Rena Labs is available at Rena Labs.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Morgan Stanley Turns Bearish, Sees S&P 500 Drop Amid Tensions
- Expert: Musk’s New $1T Pay Plan Focuses on Real Value for Tesla
- OpenAI to Allow Erotic Content in ChatGPT for Verified Adults
- Ethereum Launches Protocols to Empower Decentralised AI Agents
- Celsius Secures $299.5M Tether Settlement Over Early BTC Liquidation
