Could the crypto bloodbath have been avoided, or did systemic flaws, algorithmic trades, and insider timing make it inevitable once Trump’s tariffs went public?
Summary
- Global markets plunged after Trump’s tariff announcement, triggering one of the largest crypto bloodbaths in years as $19 billion in positions were wiped out.
- On-chain data showed a billion-dollar short placed minutes before the news, raising suspicions that insider access or automated trading influenced the collapse.
- Analysts traced much of the chaos to Binance’s pricing flaw, which caused collateral to misfire and liquidations to spread rapidly across exchanges.
- Social media erupted with claims of political ties to the trades, but no verified evidence has confirmed any connection to Trump or his circle.
Crypto bloodbath wipes out $19 billion
On Oct. 11, global crypto markets experienced one of their steepest declines after U.S. President Donald Trump announced a 100% tariff on Chinese tech exports along with broad restrictions on critical software.
Within hours, derivatives exchanges recorded more than $19 billion in liquidations, marking the largest single-day losses ever seen in digital assets.
Data from Coinglass and TradingView indicated that over 1.6 million traders were forced to close their positions during the crash.
Bitcoin (BTC) fell more than 10% in the session, hitting a low near $104,582, while Ethereum (ETH) and other major altcoins tumbled by double digits, with some losing up to half their value.
The selloff was driven mainly by long position liquidations. Around $3.7 billion worth of leveraged long orders were cleared within an hour, and nearly $600 million in short positions were also closed as extreme volatility triggered margin shortfalls across major exchanges.
Funding rates and leverage levels had remained high for several days before the correction, leaving the market vulnerable. When the downturn began, automated liquidations accelerated the drop, setting off a chain reaction known as a liquidation cascade.
Bitcoin has since rebounded to around $115,000 as of Oct. 13, but the shock has already dented trader confidence. The total crypto market cap now stands near $3.86 trillion, down from $4.3 trillion a week earlier.
The Crypto Fear and Greed Index has fallen to 40 from 59 the previous week, dipping as low as 30 during the market rout.
The Hyperliquid trade that nailed the crash
On-chain data shared by independent analysts showed that about thirty minutes before Trump’s tariff announcement, an anonymous wallet funded an account on Hyperliquid (HYPE), a decentralized derivatives exchange that offers high leverage and does not require identity verification.
The wallet was created between Oct. 9 and 10 and received an inflow ranging between $80 million and $160 million in USD Coin (USDC) through the Arbitrum (ARB) network.
Soon after receiving the funds, the same address reportedly opened a series of short positions across Bitcoin and Ethereum worth an estimated $1.1 billion in total notional value.
The Bitcoin short ranged between $419 million and $752 million with leverage between 6x and 10x, while the Ethereum short added another $330 million to $353 million with 12x leverage.
The final Ethereum short, valued around $23 million, was placed just one minute before Trump posted about tariffs on Truth Social.
When the market crash began, the account exited its positions almost exactly at the price bottom, securing profits estimated between $160 million and $200 million.
Analysts noted that such precision can be achieved using algorithmic systems designed to monitor macro-sensitive events, but the timing and scale suggested either extraordinary foresight or early access to information, raising concerns of insider trading.
Adding to the speculation, both Binance and Bybit reported temporary “technical issues” that prevented traders from closing positions during the crash. In contrast, on-chain data showed that the Hyperliquid wallet exited its positions without disruption.
Wintermute, one of the largest crypto market makers, also showed on-chain activity during the same period, moving large amounts of wrapped Bitcoin. The company described these transfers as part of “liquidity management,” a routine measure during periods of extreme volatility.
The sequence of events reveals three overlapping realities.
First, the presence of a trader capable of opening billion-dollar positions on a decentralized exchange just before a politically charged market event.
Second, the structural weaknesses of centralized platforms that left many traders unable to respond.
Third, a web of institutional players, market makers, and politically connected entities whose capital movements occurred within the same narrow timeframe.
Binance glitch amplifies market meltdown
Another crypto analyst known as ElonTrades offered a detailed explanation of what he believed caused the Oct. 11 market crash. His analysis pointed to a flaw in Binance’s collateral system rather than a weakness in any specific digital asset.
Binance’s Unified Account feature allows traders to use several assets as margin, including USDe, wrapped BETH (wBETH), and Binance Solana (BNSOL).
The problem, according to him, lay in how the exchange valued these tokens. Instead of relying on external oracles that gather prices from multiple exchanges, Binance’s system depended on its own internal order-book data.
When prices moved quickly within Binance’s market, collateral values dropped instantly, even if the same tokens held steady elsewhere.
On Oct. 6, Binance announced plans to upgrade its valuation process to an oracle-based system, but the rollout was set for Oct. 14. This left an eight-day gap during which collateral continued to depend on internal pricing.
During that time, traders reportedly sold between $60 million and $90 million worth of USDe on Binance, pushing its price down to around $0.65 on that platform while it stayed near $1 elsewhere.
The decline caused an immediate drop in collateral value within Binance’s margin system, triggering automatic liquidations for accounts that had borrowed against USDe, wBETH, and BNSOL.
ElonTrades estimated that this single issue led to between $500 million and $1 billion in forced liquidations before Trump’s tariff announcement added more pressure to the market.
The sharp decline on Binance also spread across global markets as automated bots replicated its price movements on other exchanges.
Once Binance’s liquidation cycle began, Bitcoin and Ethereum prices plunged rapidly, and many smaller altcoins fell 50% to 70% within hours.
ElonTrades concluded that Binance’s internal pricing mechanism was the main cause of the collapse. The issue did not lie with Ethena’s stablecoin USDe, which remained fully collateralized and redeemable throughout the turmoil.
Binance later admitted to “platform-related issues” and announced plans to compensate affected users.
Trump family profit rumors swirl online
Social media has been filled with posts speculating that Trump’s family may have indirectly profited from the October market crash, though no evidence has emerged to support this claim.
Much of the discussion centered on the timing of the trades that took place shortly before Trump’s tariff announcement. Many users questioned whether such coordination could have occurred without insider knowledge.
“And will there be any consequences for this blatant insider trading of crypto? Probably not,” one user wrote. Another added, “Trading off insider information is the gold standard nowadays,” reflecting how normalized some believe this behavior has become.
Others tied the speculation to Trump’s earlier ventures in digital assets, citing the TRUMP and MELANIA tokens that circulated in past market cycles. “Not unusual,” one user commented, “you guys don’t remember the TRUMP and MELANIA coins?”
Some dismissed the outrage altogether, arguing that such behavior is simply part of a system that already favors those with wealth and speed.
Blockchain records are still being reviewed, yet no evidence so far confirms any connection between the Trump family, WLFI, or any wallet tied to them.
The October crash has left behind more questions than answers. Market data, whale movements, and exchange-level flaws each reveal part of the picture, but none explain it completely.
What remains certain is that a wave of leveraged trades was enough to trigger a global sell-off, showing how quickly leverage can move billions across the market.
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