A year after crypto's largest forced-selling event wiped out roughly $20 billion in leveraged positions, Bitcoin still trades about a third below the $126,080 record it hit days before the crash. The mechanics that turned a tariff headline into a liquidation cascade remain in place, and traders are watching the same warning signs heading into this month's Federal Reserve meeting.
A year ago this weekend, Bitcoin set a record high of $126,080 on October 6, 2025. Four days later, an escalation in US-China trade tensions triggered a wave of forced selling that wiped out roughly $20 billion in leveraged positions over a single weekend. A year on, Bitcoin trades roughly a third below that peak.
What triggered the crash
On Friday, October 10, President Donald Trump announced 100% tariffs on Chinese imports, effective November 1. Crypto took the hardest hit among risk assets because it trades around the clock and carries heavy leverage.
Bitcoin fell as much as 15%, dropping toward $100,000 on some exchanges. Ether fell more than 20%. When US markets reopened Monday, spot Bitcoin and Ether ETFs recorded combined outflows of more than $755 million.
Why the mechanics still matter
A liquidation happens when a price move against a leveraged position wipes out the trader's margin, forcing the exchange to close it automatically. At 10 times leverage, a move of roughly 10% against the trade is enough to wipe out the margin; at 25 times leverage, a move of about 4% suffices.
The forced selling pushes prices lower, triggering the next layer of liquidations. Thin weekend trading makes this cascade worse, since fewer buyers are available to absorb it. The size of last October's drop was therefore about how much leverage had built up, not only the tariff news itself.
Why a green October proves little
Bitcoin has closed October higher in 10 of the past 13 years, with a median gain of about 15%, a record that earned the month its "Uptober" nickname. Yet October 2025 made a new all-time high early in the month, crashed four days later, and still finished down 3.7%.
This October has started reasonably well: according to CryptoQuant data, Bitcoin closed October 3 up 1.4% from its September close. That is not evidence of how the month will end.
What traders are watching now
Macro conditions look more important than seasonality this October. The Federal Reserve meets on October 27 and 28, and rate hikes remain a live possibility: in June, half of Fed officials projected at least one hike in 2026. Bitfinex has argued the main constraint on Bitcoin now is the yield available on low-risk assets, not sentiment toward crypto.
Traders are watching open interest against price, since rising open interest with a flat price signals building leverage. A breakout alongside flat or falling open interest would instead point to spot buying rather than borrowed money. For leveraged traders, the lesson of October 2025 is about survival rather than direction: whether positions could withstand a sudden 15% move on a quiet weekend.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
