Flash Crash Shocks Alt Market

Tariff turmoil and a record $19B crypto liquidation shake global markets — Bitcoin plunges below $100k as cascading margin calls trigger historic volatility

Key Takeaways

US tariff threats on China drove equities down over 2% & crypto assets down more
The crypto flash crash was caused by cascading margin liquidations on exchanges
Recovery may take time as markets absorb the impact of this historic shock

‍

Digital Asset Commentary

The US government remains closed with no end in sight, but tariff threats and political posturing continue. On Friday, President Trump announced an additional 100% tariff on Chinese imports, effective November 1st, in response to what he described as trade hostility from China, particularly restrictions on rare earth metals. Although Trump walked back these comments and threats over the weekend, the damage had been done. The S&P 500 and Nasdaq each closed the day down more than 2%, with the sharp decline likely exacerbated by the growing use of 0-day-to-expiry (DTE) options and dealer hedging dynamics.

Crypto markets were hit even harder with centralized exchanges (CEX) experiencing order book dislocations and severe system strain. The sudden shock triggered a cascade of liquidations, resulting in the largest leveraged wipeout in crypto history, well over $19 billion. The true figure is likely higher, as CEX liquidations are underreported, particularly on Binance, which only logs one liquidation per second. Bitcoin plunged from a daily high above $122k to below $100k on some exchanges. On certain venues, coins briefly traded down to $0 after order books were emptied and market makers paused activity.

While DeFi platforms remained operational, most positions using cross margin were liquidated, as entire account balances served as collateral. Stablecoin pegs wavered, and some of Binance’s price oracles malfunctioned, leading the exchange to reimburse $283 million to affected users. Exchanges also activated Auto-Deleveraging (ADL), forcing profitable short traders to close positions to cover losses amid a flood of long liquidations and insufficient buy interest.

Market shocks like this usually take time to recover, with top-quality assets rebounding first; any bullish continuation is more likely later in Q4. Crypto assets may need to reconsolidate and form a new base before resuming an upward move.

Download Weekly Market Review

This site is for informational purposes only.
‍
This information within it is not intended as an offer to sell, or the solicitation of an offer to buy any securities. Such offerings may only be made by prospectus and offering documents. Carefully consider the risk factors, investment objectives, fees, expenses, and other information associated with before making an investment decision. All investments are speculative, may be illiquid and involve a high degree of risk, uncertainty, and there is risk of the complete loss of the investment. There is no guarantee that any specific outcome will be achieved. We do not offer tax, financial, accounting or legal advice. The summary set forth on this website does not purport to be complete, and is qualified in its entirety by reference to the definitive offering documents.

The materials on this website or any third-party websites accessed herein are not associated with and have not been reviewed or approved by: (i) Canary Capital Group LLC or the products sponsored by Canary Capital Group LLC; or (ii) the marketing agent of Canary Capital Group LLC’s products. Each of the above hereby disclaim any and all information, products, or services described on this website or any third-party website accessed herein.

‍This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of positing, and are subject to change without notice. The information and opinions are derived from proprietary and non-proprietary sources deemed to be reliable, are not necessarily all-inclusive, and are not guaranteed as to accuracy. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

This material is published in good faith but no advice, representation or warranty, express or implied, is made by us or by any person as to its adequacy, accuracy, completeness, reasonableness or that it is fit for your particular purpose, and it should not be relied on as such. This material does not purport to be complete and is subject to change. You acknowledge that certain information contained in this website supplied by third parties may be incorrect or incomplete, and such information is provided on an "AS IS" basis. We reserve the right to change, modify, add, or delete, any content and the terms of use of this website without notice.

No information on this website constitutes business, financial, investment, trading, tax, legal, regulatory, accounting or any other advice. If you are unsure about the meaning of any information provided, please consult your financial or other professional adviser.

Investment involves risks. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Any strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

This website has not been, and will not be submitted to become, approved/verified by, or registered with, any relevant government authorities under the local laws. This website is not intended for and should not be accessed by persons located or resident in any jurisdiction where (by reason of that person's nationality, domicile, residence or otherwise) the publication or availability of this website is prohibited or contrary to local law or regulation or would subject us to any registration or licensing requirements in such jurisdiction.