Over the weekend of October 10-11, 2025, the cryptocurrency market experienced its biggest liquidation event in history. Approximately US$19 billion worth of leveraged trading positions were wiped out in just 24 hours, affecting over 1.6 million traders worldwide.

To put this in perspective, this crash is up there with previous infamous events like the COVID-19 market crash of March 2020 or the FTX collapse. We will still be talking about this in years to come. So, you may as well find out right now what happened over the weekend so you can discuss it with your little crypto mates.

What Does Liquidation Mean?

For those who don’t know, here it is, broken down. 

Say you want to buy Bitcoin because you think the price will go up.

You have €100 of your own money, but you want to buy more Bitcoin than that would normally get you. You go to a crypto trading platform that offers loans, and ask to borrow €900 more, so you can buy €1,000 worth of Bitcoin.

This is called 10x leverage. You're controlling ten times more money than you actually have.

The platform agrees, but with one condition: "If Bitcoin's price starts dropping, we'll automatically sell your Bitcoin before things get too bad."

Okay you are feeling good and the world is your oyster.

Things go Pete Tong and the Bitcoin price drops by 10%. Your €1,000 position is now worth only €900. Since you borrowed €900 and only had €100 of your own money, you've lost everything you put in.

The platform says: "We need to protect our €900. We're selling your position right now." This automatic forced sale is called a liquidation.

The Result:

• You lose your entire €100. It's completely gone
• The platform gets their €900 back by selling your position
• The platform usually doesn't lose money.

The Chain Reaction

Now multiply this scenario by millions of people with billions of dollars. When the market starts dropping, it triggers a devastating chain reaction:

• Prices begin to fall
• Thousands of leveraged positions hit their liquidation points
• Platforms automatically sell to recover their loans
• This massive selling causes prices to drop even further
• More liquidations are triggered
• The cycle continues like a snowball rolling downhill.
• You have to move in with your weird uncle because you have lost everything.

What Triggered This Crash

The immediate trigger was geopolitical: President Trump announced 100% tariffs on Chinese imports starting November 1, 2025, along with export controls on critical software.

Even though cryptocurrency is supposed to be independent of traditional finance, it actually behaves like a high-risk tech investment. 

The domino effect kicks in.

After Trump announced massive tariffs, investors feared a US-China economic conflict.

They sell risky assets (stocks, crypto) and move to safe havens (cash, gold, bonds).

Crypto prices drop sharply. Leveraged traders get liquidated.

The liquidations cause prices to fall even faster.

Markets hate uncertainty, and a trade war between the world's two largest economies creates massive uncertainty about global economic growth.

The scale of destruction was staggering:

Total liquidations: US$19+ billion in 24 hours

Traders affected: 1,618,240 people

Long positions: US$16.7 billion (people betting prices would go up)

Bitcoin alone: US$1.37 billion in liquidations

Ethereum: US$1.26 billion in liquidations

Biggest single trade wiped out: US$87.53 million on one Bitcoin trade. 

Crypto and Leverage in Ireland

In Ireland, retail investors have different rules. More or less, the ceiling traders can use leverage at is in a ratio of 1:2. In terms of leveraged trading in general (not just with cryptos) a Central Bank of Ireland review found that in 2015-2016, 75% of retail clients lost money using leveraged trades. So keep this in mind if you ever get tempted to go down that road. 

 How Leverage Works When Things Go Right

If the trader's bet pays off, they make enormous profits.

This is how a winning scenario looks: With your €100 and borrowed €900 (10x leverage), you buy €1,000 worth of Bitcoin. If Bitcoin goes up 10%, your position is worth €1,100.

• Repay the €900 loan (plus small fees)
• Keep €200 (your original €100 + €100 profit)
• You doubled your money with just a 10% Bitcoin price increase.

Leverage When Things Go Wrong

The more leverage you use, the faster you can get liquidated.

10x leverage

You put in €100, borrow €900, control €1,000 worth of Bitcoin. 

If Bitcoin drops 10%, your €1,000 becomes €900. 

You've lost your entire €100 → liquidated.

5x leverage

You put in €100, borrow €400, control €500 worth of Bitcoin. If Bitcoin drops 20%, your €500 becomes €400. 

You've lost your entire €100 → liquidated.

2x leverage

You put in €100, borrow €100, control €200 worth of Bitcoin. 

If Bitcoin drops 50%, your €200 becomes €100. 

You've lost your entire €100 → liquidated.

Who Actually Loses Money?

The trader who used leverage loses their entire collateral (the money they put in), plus any fees. In most cases, they're the only ones who lose real money.

Exchanges and lending platforms typically don't lose money because they automatically liquidate positions before losses exceed the collateral. 

Also, they maintain insurance funds for extreme situations, like when the price crashes so fast that the exchange can’t sell fast enough, despite it being automated. This is uncommon however. 

The system is designed to protect the lender first.

Where We Are Now

Just days before this crash, Bitcoin had been riding high, pushing past US$125,000 and setting new all-time highs. The rally had been fueled by strong institutional investment through ETFs and concerns about traditional currency devaluation.

As of Monday morning, October 13, 2025, Bitcoin is trading around US$115,000. Ethereum on the same day had recovered from around US$3,400 to US$4,100. The market is catching its breath after the violent weekend selloff.

If confidence returns, traders may see current prices as a buying opportunity.

If more bad news emerges or trade tensions escalate, selling could continue.

There could be sideways movement. The market might become fairly stable at current levels while digesting the news.

But of course, this is crypto and it is famous for being volatile, so who knows!

What we Have Learned

For those new to crypto volatility, we have learned a few things this weekend. Leverage trading lets you control much more money than you have, but it's extremely risky. There could be a big upside, but also that comes with the possibility of a big downside. Ask yourself, how much do I want to live with my weird uncle? 

A small price drop can wipe out your entire investment when using leverage.

And we have learned that crypto behaves like a high-risk asset, despite being supposedly independent of traditional markets.

Leverage trading is like driving with hitting the accelerator pedal in an EV. You can take off fast, but one wrong move and you will be needing to book in your car for crash repairs. 

Please remember past performance is not a reliable indicator of future results. Don’t invest unless you’re prepared to lose all the money you invest. Due to the nature, complexity and volatility of crypto, it may be perceived to be a high‑risk investment. There are no government or central bank guarantees in the event something goes wrong with your investment.

CoinJar Europe Limited (CRO 720832) is registered as a VASP and supervised by the Central Bank of Ireland (Registration number C496731) for Anti-Money Laundering and Countering the Financing of Terrorism purposes only. CoinJar Europe Limited (CRO 720832) is registered as a VASP and supervised by the Central Bank of Ireland (Registration number C496731) for Anti-Money Laundering and Countering the Financing of Terrorism purposes only.