Key takeaways
- The price of bitcoin briefly fell below $110,000 on October 10, amid what traders are calling the largest single-day liquidation event in crypto history.
- Prices of lesser-known coins fell 80% over the weekend and cryptocurrency-related stocks have faded so far on Tuesday.
Trade tensions between the United States and China triggered a massive sell-off in bitcoin and altcoins on Friday. Today, the industry is talking about the largest one-day purge in crypto history.
More than $19 billion in leveraged crypto bets were liquidated in a 24-hour period that ended Saturday evening, affecting some 1.6 million traders, according to research platform Coinglass, which called its estimate conservative and the actual total “likely much higher.”
Bitcoin, which had been rising in the so-called debasement trade, diverged from gold when Beijing imposed new restrictions on exports of rare earth minerals and later prompted President Donald Trump to threaten to impose 100% tariffs on China. As the market digested the new trade dispute, Bitcoin stopped holding gold’s hand and followed risky assets, like stocks, lower, moving away from a recent record high.
“Concerns about increased pricing were undeniably the catalyst,” Sean Farrell, Fundstrat’s head of digital assets, said of the sale in a Monday report.
Why this matters to you
Investors seeking shelter from geopolitical tensions and the waning dominance of the U.S. dollar have driven up the prices of gold and bitcoin. The latest phase of the US-China trade war appears to have temporarily severed the link between the two assets, making the world’s largest cryptocurrency behave more like other risky assets, such as stocks.
The operational quirks of the crypto market have fanned the flames. When traders rushed to the exit at a time when there was less liquidity, the added selling pressure destroyed coin prices. (Although crypto markets do not close, trading volumes tend to rise and fall depending on the opening hours of US stock markets.). Bitcoin (BTCUSD) fell below $110,000, while altcoins including Ethereum (ETHUSD) and solana (SOLUSD) saw double-digit declines. Some lesser-known coins have lost four-fifths of their value.
The chaos has led to price dislocation of some coins on trading platforms. For example, according to Farrell, the price of solana was once about $20 lower on the international exchange Binance than on Coinbase. Data from Coinglass shows that the liquidations of Hyperliquid, Bybit and Binance accounted for the majority of the $19 billion purge that occurred between October 10 and 11.
Some prices are starting to rise. For example, Bitcoin recently returned above $112,000. But crypto-related stocks, including Strategy (MSTR), Coinbase (COIN), Circle (CRCL), and Robinhood (HOOD), were all down in recent trading.
BlackRock (BLK) chief Larry Fink defended bitcoin’s role in investors’ portfolios in an interview with CBS on Sunday. “There is a role for crypto in the same way as there is for gold,” he said.
