The cryptocurrency world was rocked to its core last week as a record-shattering $19 billion was wiped out from digital asset markets in just one day, following a dramatic escalation in U.S.-China trade tensions. The selloff, which analysts are already calling the largest in crypto history, dwarfed previous meltdowns by a staggering margin—nine times larger than the February 2025 crash and 19 times the scale of the infamous March 2020 pandemic plunge and the FTX collapse in 2022, according to The Economic Times and Reuters.
The turmoil began on October 10, 2025, after U.S. President Donald Trump stunned markets with the announcement of a 100% tariff on Chinese imports and threats of export controls on critical software. The news, delivered late in the day, sent shockwaves through global financial markets. In the thinly traded and often volatile crypto sector, panic selling erupted almost instantly, triggering a cascade of liquidations across leveraged positions.
Bitcoin (BTC), the world’s most prominent cryptocurrency, plunged more than 14% from its recent highs, hitting a low of $104,782.88—down from a record above $126,000 just days earlier. Ethereum (ETH), the second largest digital asset, was not spared, tumbling 12.2% to $3,436.29 before rebounding to $4,254 later in the day. Altcoins, which are often more volatile and less liquid, suffered even steeper losses: HYPE plummeted 54%, DOGE cratered 62%, and AVAX nosedived 70%, though most eventually stabilized as the dust began to settle.
According to Sean Dawson, Head of Research at Derive.xyz in Canberra, “Last Friday, you saw volatility just jump across the board, not only for short-dated, but also for long-dated maturities. The sentiment around short-dated volatility is that more people are worried about downward turns.” His comments, reported by Reuters, echoed the mood of a market suddenly gripped by fear and uncertainty.
Options market data from Derive.xyz painted a clear picture of investor anxiety. Traders rushed to buy bearish “put” options on both Bitcoin and Ether, seeking protection against further declines. For Bitcoin, hefty purchases targeted $115,000 and $95,000 strike puts expiring October 31, while a sharp reversal from call buying to call selling at the $125,000 strike for October 17 suggested a rapid shift to a bearish short-term outlook. Ether traders focused on $4,000 and $3,600 strikes for October and loaded up on $2,600 puts for December, signaling caution well into year-end.
Nick Forster, Derive.xyz co-founder, explained, “Those strikes are indicative of growing bearish sentiment through year-end.” The rush for downside protection was unmistakable, as volatility soared across all maturities and traders scrambled to hedge risk.
Despite the carnage, some corners of the crypto market showed surprising resilience. On-chain data highlighted by prominent analyst Willy Woo indicated that Bitcoin investor flows remained robust. Rather than fleeing the sector entirely, many investors appeared to be rotating capital out of battered altcoins and into Bitcoin, reinforcing its status as the “blue-chip” crypto asset favored by institutions. Ether and Solana, in contrast, saw significant outflows, underscoring the divergent fortunes within the digital asset landscape.
“The good news is that this crash has flushed out excessive leverage,” said Nic Puckrin, co-founder of The Coin Bureau, as quoted by The Economic Times. “But now, Bitcoin must overcome key resistance levels to hit a meaningful new all-time high this year.” The sentiment was echoed by other analysts, who noted that while the market’s risk profile had been reset, the path forward remained fraught with uncertainty.
Adding another layer of intrigue—and controversy—to the week’s events was the emergence of a so-called “Trump Insider Whale,” a trader who reportedly increased a massive Bitcoin short position by $392 million in the hours surrounding Trump’s tariff announcement. According to Arkham Intelligence, the same wallet had previously shorted $700 million in Bitcoin and $350 million in Ether just before the crash, allegedly earning around $200 million in profits. Blockchain data from StarPlatinum revealed that the wallet, linked to the address 0xb317…, controls over $10 billion in assets, including 46,000 BTC and large holdings of staked ETH.
The timing of these trades—opening a massive short just 30 minutes before Trump’s announcement and closing for a $192 million profit—has raised eyebrows among analysts and regulators alike. While domain records connect the address to garrettjin.eth, possibly tied to former BitForex CEO Garrett Jin, he has denied any involvement. Nonetheless, suspicions of insider knowledge have fueled calls for investigation. As EGRAG CRYPTO wrote on X, “If this whale profits again right after Trump’s next announcement, they should be investigated.” Researcher Janis Kluge of SWP Berlin added, “Crypto investors are realizing what unregulated markets really mean—insider trading, corruption, and zero accountability.”
The fallout from the crash was swift and severe. More than 250 wallets on the Hyperliquid platform reportedly lost millionaire status overnight, while another trader opened a 40x long position on Bitcoin, underscoring the extreme risk appetite still present in certain pockets of the market. The episode served as a stark reminder of crypto’s wild swings and the challenges of managing risk in an unregulated environment.
In the aftermath, President Trump attempted to calm nerves, stating over the weekend that the U.S. “did not want to hurt China” and that “it will all be fine.” China, for its part, blamed Washington for the escalation but refrained from immediate countermeasures—a move that helped steady sentiment and allowed crypto prices to recover some ground.
Looking ahead, analysts agree that the coming weeks will be critical. With volatility at multi-month highs and traders heavily hedged, sentiment remains fragile. If Bitcoin fails to reclaim the $120,000 level soon, another wave of liquidations could be in the cards. Yet, for some, the shakeout has created opportunities. As Puckrin put it, “Now, long-term holders have a cleaner path—but short-term volatility will stay elevated.”
For now, the crypto market stands at a crossroads—bruised but not broken, wary but still hopeful. The lessons of the crash are clear: in the world of digital assets, risk management and vigilance are more crucial than ever.
