10/10 Crash Retrospective: $19B Liquidation Event, Cascading Margins & Post-Bear Market Recovery

It has been exactly one year since the largest liquidation in crypto history happened. $19 billion within a 24-hour period was liquidated by people using leverage with Bitcoin and crypto. This is referred to as 1010 because it happened in 2025 on October 10th. And a lot of people attribute this to the bare market that we've been in for the last year, at least sort of the starting gun, to a price decline and a stagnation in price. There's still some things that we don't know about this and maybe intentionally so because there are some things that could be seen as pretty shady around this. I'm going to get into all the details that I have as well as some of that speculation.

My name is Forest Huddle. I'm a Bitcoin educator. I produce lots of free tutorials and Bitcoin educational content here on YouTube. And I also offer one-on-one private coaching sessions. This is for people who want the best security practices for their Bitcoin and want some extra help making sure that all of their Bitcoin questions are answered. If that sounds like you, you can reach out to me through my website, pathtobitcoin.xyz, and it's linked in the description below.

So, as I said, $19 billion worth of liquidations happened in a 24-hour period. That was partially due to and a cause of a 14% decline in Bitcoin's price. And it's estimated that 85 to 90% of that was a long leverage. So these are people hoping that the Bitcoin price continues to go up and they are leveraged in the position to see that happen. And when that doesn't happen, when the Bitcoin price goes down, there's something called a margin call or a liquidation price where they have to close that position because the trade has gone against them. The reason there was so much leverage in the positive position going long, hoping that Bitcoin's price goes up is because 4 days earlier on October 6th, Bitcoin hit an all-time high of roughly around $126,000.

So everybody was seeing the Bitcoin's price go up. They were becoming euphoric. They were thinking it was going to go higher. They were trading the momentum of that move upwards and they were applying leverage within their positions to see more positive outcome from that price movement if it was to continue. So the leverage wipeout happened because Bitcoin's price was declining because of other events. But the leverage wipeout also helped push the price further in that continued direction downwards. So I want to explain why that happens. And I have this heat map up here of leverage within Bitcoin currently one year later with a Bitcoin price of $82,000. And this is on my website path to bitcoin.xyz as well. Just hit the huddle report to get here.

So this is a heat map of the three largest crypto exchanges that have perpetual futures for Bitcoin. And this shows leverage within there. So the black part is showing very little leverage or none. And as it becomes light blue and then yellow and then orange and then red, it shows more density of leverage at that price point. And this is over the last month. So you can actually see that there's some leveraged longs here. For instance, at September 18th, there's some leverage shorts right here at 79,000. And Bitcoin's price went from 77 to 80,000. And you can see there's no leverage after that because those positions had to close out. And when you're short something and you have to close that position out, that acts like a buy. And because the price is going up against your short trade when you end up buying Bitcoin to close out your short, you are actually applying more buy pressure which pushes the price up further.

So you can see how the opposite thing would happen on 1010 where when the price declines and leveraged longs are being forced to close, they have to close their long position by selling Bitcoin which pushes the price further down. So if liquidations happen, it will continue the move in that direction by the leverage being closed out and those liquidations themselves happening. So what was the potential cause here for the beginning of those liquidations happening and that momentum moving in the negative direction here, price going down? Well, the first spark is arguably the fact that the US government put 100% tariffs on the Chinese imports. And this was a surprise announcement and the economy, the financial world, the traders out there, they don't like surprises or they react to surprises essentially in a very abrupt way. So this would have been seen as a negative. Of course, Bitcoin is not affected by imports and outports, but a taxation in the form of a tariff on imports could potentially slow the economy and that could affect the outcomes of different companies and people's wages. It could have a effect into the future that would cause a slowdown in the economy. That's basically how it's perceived and the market reacts to that very quickly because the market is forwardlooking and something unexpected happened that affects the future growth of companies and income and all of that. And so that effect happens very quickly in an instrument as available for trading as Bitcoin.

But again, this wasn't just Bitcoin. So crypto, it all trades 24/7, some of it more liquid or less liquid, but it can be used as an expression while other markets are closed for traders and investors to speculate on how an event like 100% tariffs on imports can affect the rest of the market. So, that's potentially the starting gun of why the price started to decline. Of course, then it's going to hit different liquidation points, continue that momentum a little bit.

And there's one more event which this is sort of the event that has more speculation behind it and it's the fact that there was this stable coin called USDE and specifically on the exchange Binance where a lot of leverage happens a lot of trading a lot of the market for crypto happens. This stable coin went down to 65 cents where it's supposed to be at a dollar. However, on other DeFi pools, it stayed at a dollar. It was potentially orchestrated by, and again, I'm getting into some speculation territory here, but by somebody that saw a potential to exploit this specific US dollar stable coin because of its connection and its use as collateral for leverage trades. So people were taking out leverage, holding USDE as the stable position to be able to borrow from and create leverage from. And then as that depegs, that could be a potential problem for those leverage positions where they would have to close out or they would have to add more collateral. And it all happened so quickly that likely those margins are just getting hit right away. And those are forced closes. And a lot of people likely got very screwed that were trading and using USDE as their stability to create the loan and the leverage within their trades. So that created forced liquidations. And again, what did we talk about with liquidations? But it's a cascading effect. The more liquidations happen, the more the price goes in that same direction to cause more and more liquidations.

Now, eventually it's going to dry up again. Again, looking back at this liquidation chart here, you can see that there's leverage all the way down. The long leverage down to 77 here. But as you start to go to 73, it goes blue. There's no leverage here detected. Little bit more leverage at 65. It's going to start having sort of diminishing returns and buyers are going to come in as they see a dip buying opportunity. So, there's sort of only so far that leverage itself will push a price and it's usually just in the short term, and that sort of evens out at a certain point. So, it's very effective at first, but once that leverage is wiped, there's very little leverage below that.

So the $19 billion headline number seems like a lot, but it is a headline number and it is a lot as well. But let's understand how liquidations work here. If somebody has $10,000 worth of collateral and they do a 10x Bitcoin trade with it for a $100,000 position and the trade goes against them and they get margin called, they're only going to lose a large portion of the $10,000 of value in collateral. Maybe they get margin called when their LTV goes to 80% or 90% or whatever. So, they're left over with a tiny portion of that cash and the rest of that is lost, there's going to be fees on top of that and so on. And also these exchanges allow them to take on huge percentages of leverage relative to their collateral. So they're likely to be left with very very little at the end of it, but it's still of the collateral base, not of the leveraged nominal value. So of the 19 billion, some percentage of that, some fraction of it is loss from traders. But the 19 billion is a headline number of leverage within that system.

So where are we a year later? Well, we're 34% down from the top. Although we did drop all the way down to around 58,000 this year, which is a 54% drop from the peak. And this was initially caused by this exact event. And a year later, it's seeming like we are out of this bare market. So we have done a massive decline. We're up roughly around 44% from the low of the 58,000. We still have a ways to go to a new all-time high, but it's highly likely as we review what's happening price action-wise that a year after this liquidation event that we are out of or very close to being out of a true bare market. And if all we had was a 54% decline and a one-year bare market, both of those are a lot less steep. So, we're not quite out of the woods just based on those numbers, those metrics, how many times the earth has spun around, but a lot of other signals are showing that it is highly likely that we are out of this bare market that was initially caused by October 10th, 2025.

So, the Bitcoin traders did not fare well from this event, but the Bitcoin hodlers were doing all right. Of course, we're down a little bit if we bought the pico top, but most of us are dollar cost averaging, buying accelerated dollar cost average during the dips. And it's really the traders that took it on the chin during 1010. Bitcoin is looking healthier than ever on many, many metrics. And it looks to me like we have a bright future of green lines ahead of us. So hopefully you stacked as much Bitcoin as you possibly could over the last year here and prepared yourself and future generations to hold that wealth securely. If you need some additional help with that, you can reach out through my website, pathtobitcoin.xyz. Remember, what your Bitcoin is worth today is not what it's going to be worth in the future. It's going to be worth a lot more, so you should probably secure it like it already is. Thanks everybody for watching and we'll see you on the next.