Geopolitical shadows linger: $19 billion in cryptocurrency "Black Friday" liquidations, experts warn that "systemic risks" remain.

Last Friday (October 10, 2025), due to former U.S. President Trump threatening to impose a 100% tariff on China, the global market experienced fluctuations, and the crypto assets market faced the “most severe liquidation” in history, with nearly 20 billion dollars in positions liquidated, and Bitcoin once plummeted by 17%. Although Trump subsequently sent signals of easing, leading to a rebound in U.S. stock futures, crude oil, and crypto asset prices, the decline in Asian stock markets and the surge in options market volatility indicate that investors are skeptical about the durability of the “ceasefire.” Analysts warn that this rebound may mask deeper liquidity and centralization risks within the encryption industry.

Geopolitical Warming: A Short-Term “Breather” for Global Risk Assets

During last Friday's “Black Friday,” the Trump administration's response to China's restrictions on rare earth exports—threatening to impose 100% tariffs and critical software export controls—led to a panic sell-off in the market. The S&P 500 index plunged 3.37%, hitting a 29-day low. The crypto market faced about $20 billion in liquidations.

However, over the weekend, the Trump administration signaled a willingness to reach an agreement with China to avoid a full-blown trade war, bringing a brief sense of optimism to the market.

· US stocks and crude oil rebound: On Monday, S&P 500 index futures rose by 1.3%, Nasdaq 100 index futures jumped by 1.7%, and crude oil prices rebounded by 1.5%, reflecting the market's correction of excessive selling.

· Crypto Assets market stabilizes: Bitcoin rises 4.4% within 24 hours, with the altcoin Bittensor leading the charge at 42%, and the overall Crypto Assets market trending towards stability.

Anna Wu, a cross-asset strategist at Van Eck Associates Corp., believes that the current situation resembles a pre-negotiation phase where China and the U.S. are engaged in “talks while fighting” ahead of the November deadline, with the market correcting for the excessive sell-off on Friday.

“Waterfall Effect” Shock: Liquidation Mechanism and Liquidity Risk Exposed

The on-chain options platform Derive's research director Sean Dawson described this big dump as “the most dramatic collapse in crypto history,” with nearly 19 billion positions (note: there is a slight difference from the original 20 billion, both reflecting the enormous scale of liquidation) being liquidated.

Dawson explained the “cascading effect” that occurs during liquidation: panic selling is amplified in markets with insufficient liquidity, and once liquidity (quotes from Market Makers) evaporates, each forced sale has a huge price impact, triggering more liquidations and accelerating the entire collapse process.

· Options market volatility surges: Volatility has surged across all maturities, not just short-term options, indicating that the market is preparing for long-term instability.

Traders Shift to Defense: Surge in Demand for Put Protection

After the liquidation wave, traders' strategies have undergone a significant shift, generally moving from “bullish risk exposure” to “bearish protection”. This defensive shift is reflected in the decline of skew in the options market:

· Bearish skew: Investors are significantly favoring put options. Bitcoin (BTC) options are notably focused on put strike prices of $115,000 and $95,000; Ethereum (ETH) options are focused on put strike prices of $4,000 and $3,600.

· Medium-term bullish signal: Although short-term demand remains bearish, the demand for bullish options (Calls) with a maturity of more than 30 days has increased, suggesting that some traders expect the market to experience a final rebound in the later part of this quarter.

Pepperstone Group strategist Dilin Wu summarized that the market is debating whether the tariff threat will materialize. If it ultimately turns out to be just a negotiation strategy, the current pullback may be a “buying opportunity on dips”; however, if the tariffs take effect on November 1, a new wave of volatility and global risk reassessment will follow.

Underlying Concerns: Beware of WBETH Liquidity and Centralization Risks

Marco Lim, Managing Director of Solowin Holdings and Founding Partner of MaiCapital, warned that this weekend's Crypto Assets Rebound “masks deeper structural risks.”

Lim pointed out that his concern is not about tariffs, but rather the systemic vulnerabilities surrounding WBETH (Wrapped Beacon ETH) and the liquidity dominance of mainstream CEXs. He stated, “A 10% fluctuation in Bitcoin has already put pressure on the liquidity of Wrapped Ethereum,” and suggested that if mainstream CEXs continue to be a “Single Point of Failure” for stablecoin liquidity, then the next cascade liquidation is “just a step away.”

Dawson also echoed this view, believing that the rebound “does not mean that the danger has passed. It is more like a recalibration, a pause before the next move.” He suggested that traders should maintain a defensive posture until the market rebuilds liquidity and confidence, and macro risks recede.

Conclusion

The global market turmoil triggered by the geopolitical black swan clearly demonstrates the increasingly close correlation between Crypto Assets and traditional financial markets. Although Trump's easing attitude has brought short-term support for risk assets, behind this “V-shaped” Rebound is the soaring Volatility in the Options market and a surge in traders hedging against down risks, reflecting a deep-seated distrust. Furthermore, industry experts' concerns over the systemic risks posed by WBETH Liquidity and the monopoly of mainstream CEXs serve as a reminder to all participants that the true crisis in the market may not come from external conflicts, but rather from the hidden Liquidity and centralized structure within.

This article is for news information only and does not constitute any investment advice. The crypto market is highly volatile, and investors should make decisions with caution.