The Friday, Oct. 10 crypto crash, dubbed the biggest liquidation event in crypto history, with more than $19 billion wiped from leveraged crypto bets, left traders with far smaller losses than is widely reported, analysts say.
The cascade hit major exchanges as positions were auto-liquidated, sending Bitcoin crashing to a five-month low of $104,000. In total, 1.6 million crypto traders were liquidated in 24 hours, according to data from CoinGlass.
Speaking to Cryptonews, Sam Seo, chairman of the Kaia DLT Foundation, said the actual capital lost by traders is likely in the range of 5% to 15% of the headline number, translating to between $950 million and $2.85 billion in real losses.
“The remaining 85-95% was simply phantom leverage, synthetic exposure that was rapidly unwound,” he said, warning:
The real damage…is the evaporation of liquidity and the severe blow to market confidence that follows. It reveals an ecosystem that is still prioritizing speculative amplification over stable, utility-driven growth.
Crypto’s largest single-day purge was triggered by U.S. President Donald Trump, who threatened a 100% tariff on China starting Nov. 1. Trump was reacting to reports that Beijing had placed new restrictions on rare earth minerals exports.
The trade tensions sent the crypto markets reeling. Top altcoins Ether, BNB, XRP, and SOL tumbled alongside Bitcoin, losing between 15% and 20% of their values. Some little-known coins fell as much as 80%.
As panic spread on social media, veteran Bitcoin developer and analyst Udi Wertheimer was the first to call out the hysteria on Crypto Twitter, saying traders and investors were confusing leverage with loss.
“I don’t know who needs to hear this,” Wertheimer posted on X, formerly Twitter. “But [$19 billion] in liquidations doesn’t mean people lost [$19B]. It means that [$19B] worth of leveraged positions were forced-closed.”
“You have $100 in your account and opened a $2,000 long. Your $2,000 position got liquidated, but you only lost $100. You guys seem to literally think people lost [$19 billion]. It’s not even close,” he added.
i don’t know who needs to hear this but “$15B in liquidations” doesn’t mean that people lost $15B
it means that $15B worth of leveraged positions were forced-closed
example: you retards have $100 in your account and opened a $2000 long. your $2000 position got liquidated but…
— Udi Wertheimer (@udiWertheimer) October 12, 2025
Crypto Liquidations: What the $19B Really Means
According to Patrick Heusser, head of lending and TradFi at Sentora, formerly IntoTheBlock, the $19 billion figure represents the face value of leveraged positions forced-closed, not the real dollar loss.
“When a long is liquidated, the trader typically loses their posted margin; the rest of that notional was borrowed exposure,” Heusser told Cryptonews, adding:
Think of liquidations as a speedometer for deleveraging intensity, not a profit and loss statement. Exchanges settle these events using margin, insurance funds, and, in rare cases, auto-deleveraging. This means money isn’t disappearing so much as it’s being redistributed.
Leverage allows traders to boost their bets, using, say $1 of capital to control $10, $50, or even $100 in crypto exposure. The cash at risk in any liquidation event is usually a fraction of the notional value, say analysts.
Heusser hazards that with an average leverage of around 10x on most spot or perpetual markets, the actual capital lost during the October 10 liquidations was between “$1 billion to several billion…not nineteen.”
“Open interest collapsing tells you leverage came out of the system,” he said. “It doesn’t mean an equal pile of cash evaporated.”
For example, Glassnode data shows that Bitcoin futures open interest tanked on Oct. 10, erasing over $10 billion in notional positions.
It is one of the largest single-day declines on record, said the firm, comparable in magnitude to the May 2021 liquidation and the FTX unwind in 2022.
Seo, the Kaia chairman, concurred with Heusser, saying $19 billion liquidation headlines are “dramatic, but misleading.” He noted that “the real loss for traders is their initial margin (the collateral they posted).”
Understanding this mechanic is the first step to realizing that our current market structure is built on a house of cards, where synthetic leverage distorts true price discovery and creates massive systemic risk.
Why the Market Panicked
Some crypto prices started to creep back up after China clarified that rare earth minerals exports were not completely banned. BTC rose above $116,000 earlier this week, for example, only to go lower after Jerome Powell’s ambivalent speech.
