There are moments when crypto’s fiercely optimistic traders are forced to reckon with markets’ unwritten rules. October 10 2025 delivered one of those reality checks. A day when leverage was punished, liquidity vanished, and even seasoned participants found themselves staring at red screens as billions were wiped off the crypto market.

The anatomy of the crypto market meltdown

The spark for the carnage was a potent mix of macro triggers: trade tensions and tariff headlines drove a risk-off cascade. Within a single hour, Bitcoin plummeted by about 13%, and altcoins experienced even worse slippage. Some, like ATOM, briefly plunged to near-zero on illiquid exchanges before partial recoveries.

Market-wide, more than $20 billion in leveraged positions were liquidated across centralized and decentralized platforms, making it, as Bitwise portfolio manager Jonathan Man noted, the largest blowout in crypto’s history.​

This was not a slow bleed. Weeks of bullish build-up and sky-high open interest evaporated from the crypto market overnight, resetting market positioning to where it stood months prior. In total, over $65 billion in open interest vanished from the system.​

Who really got washed out?

It’s tempting to say “retail got wrecked.” But Wolf of All Streets’ Scott Melker, echoing the consensus of several analysts, set the record straight:

“The people who got liquidated weren’t retail investors. They were crypto natives and traders using leverage on decentralized exchanges. As always… This was painful, but it wasn’t a retail flush. It was a leverage washout of our most ardent believers.”​

The data support this. New retail flows are increasingly buying spot or large-cap ETFs, largely immune to internal DeFi leverage mechanics. The traders left holding the bag w

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Author: Christina Comben