Bitcoin’s Epic Crash: 13% Plunge, $19.36

Bitcoin's Epic Crash: 13% Plunge, $19.36B Liquidations, and the Fading "Safe-Haven" Narrative

 

In the early hours of October 11, 2025, the cryptocurrency market was hit by a historic sell-off. Just as Deutsche Bank released a bullish report predicting Bitcoin could become a key central bank reserve asset (on par with gold) by 2030, Bitcoin's price staged a heart-stopping crash—plunging over 13% in 24 hours to a low of around $105,900. This drop erased nearly 20% of its value from the weekly all-time high of $126,250, marking the largest crypto sell-off since April 2025. Overnight, over 1.6 million investors were liquidated, evoking memories of previous crypto meltdowns.

 

The chaos spread beyond Bitcoin. Ethereum (ETH) tumbled over 20% to a low of ~$3,380, while major altcoins like XRP, BNB, and Dogecoin crashed more than 30%. Smaller, less liquid "altcoins" saw断崖式 (cliff-like) drops, with many losing nearly all their value in minutes. "It's been a brutal day," lamented Ram Ahluwalia, founder of investment firm Lumida Wealth, as veteran traders compared the crash to "a repeat of COVID's Black Thursday" for its unprecedented speed.

 

The root cause? Excessive leverage. In recent months, much of the capital fueling Bitcoin's rally came not from long-term investors, but from speculative funds using futures contracts, crypto lending, and yield farming. When negative sentiment hit, these highly leveraged long positions collapsed: breaking key technical support levels triggered a wave of forced liquidations, snowballing into a market-wide sell-off. As market analytics firm Glassnode warned earlier that week, "Rising leverage and crowded bullish positions in this Bitcoin rally signal growing short-term fragility." Qadir, founder of CoinPedia, added that traders shifting to high-leverage contracts to chase airdrop gains had masked real risks, while "trading bots and algorithms amplified the chaos."

 

Data from Coinglass underscored the carnage: global crypto liquidations hit $19.36 billion in 24 hours, with ~1.66 million traders forced out—an all-time single-day record. Crypto analyst MLM estimated the actual figure could be $30–40 billion, as some exchanges' data was not fully counted.

 

Stablecoins, designed to hold a $1 peg, also cracked. Ethena Labs' synthetic stablecoin USDe decoupled sharply, dropping to as low as $0.62 on some decentralized exchanges (a 38% collapse). The decoupling stemmed from three factors: panic selling overwhelming thin liquidity as holders rushed to swap USDe for USDT/USDC to cover margins; the collapse of leveraged lending loops (users had borrowed against 12%-yielding USDe to amplify gains, and falling USDe value triggered even 1x position liquidations); and the depegging of collateral assets like ETH and liquid staking derivatives (WBETH, BNSOL), which strained USDe's stability mechanism. Ethena Labs later confirmed USDe remained overcollateralized, with minting/redemption functions intact.

 

This crash is not an anomaly. It echoes past crypto meltdowns: the March 2020 "312 Crash" (Bitcoin halved to <$4,000 amid COVID panic), the February 2021 "222 Collapse" (15% drop after Musk called Bitcoin "overpriced"), and the May 2021 "519 Crash" (30% plunge post-China's crypto crackdown). Each had a unique trigger, but all shared the same pattern: leveraged liquidations, vanishing liquidity, and a rapid shift from greed to fear. As Andreas Adriano, senior advisor at the IMF, noted, "Crypto investors' preference for credit card purchases and margin trading amplifies volatility—when margins are called, forced selling pushes prices lower, mirroring the 17th-century Tulip Mania, 1929 Stock Crash, and today's crypto collapses."

 

The crash also dealt a blow to Bitcoin's "safe-haven" narrative. In 2025, Bitcoin's price has closely tracked U.S. tech stocks; amid macro uncertainty or liquidity tightening, it falls with risk assets—even when gold (a traditional safe haven) rises. "Bitcoin remains a classic risk asset," commented Fortune magazine, "sold first at the slightest sign of trouble, like high-yield bonds or emerging market funds."

 

Finally, the crash dimmed Deutsche Bank's vision of Bitcoin as a 2030 central bank reserve asset. Liu Ying, researcher at Renmin University's Chongyang Institute for Financial Studies, argued, "Reserve assets need stability—Bitcoin's high leverage, risk, and volatility disqualify it. It also faces structural risks: hack vulnerabilities and liquidity shortages (its algorithmically fixed, halving supply risks deflation, and central banks may struggle to buy/sell when needed)." Bao Hong, associate dean at CUHK (Shenzhen)'s Qianhai Institute, added Bitcoin could "theoretically" be a reserve asset, but only "after the U.S. dollar and gold become untrustworthy"—a distant scenario. Major central banks (the Fed, ECB) and the World Bank have already ruled out holding Bitcoin.

 

By October 11, Bitcoin had rebounded slightly to ~$112,000 (a 7.5% 24-hour drop), with options markets showing a surge in bullish bets as some funds bought the dip. Yet sentiment has shifted from greed to caution. For now, Bitcoin's status as a "digital gold" remains unproven—and its journey to mainstream acceptance, let alone central bank reserves, looks longer than ever.