Over the weekend, the cryptocurrency market experienced what traders are calling “Crypto Black Friday,” a dramatic liquidation cascade that wiped out nearly $20 billion in leveraged positions within 24 hours on 10 October. The event marked the largest single-day deleveraging ever recorded in digital asset markets.

According to aggregated exchange data, Hyperliquid processed more than $10 billion of the total liquidations, while Binance accounted for about $2.4 billion. The remaining volume was scattered across Bybit, OKX, and other offshore platforms.

Altcoins suffered the heaviest drawdowns, while Bitcoin’s decline was comparatively moderate, falling only about 8% from its all-time high of $126,000. By the end of the sell-off, around $65 billion of futures open interest (OI) had vanished, resetting speculative positioning to levels last seen in July 2025.

Bitwise portfolio manager Jonathan Man described the event as “a full-scale deleveraging reset,” noting that much of the impact was concentrated on offshore derivatives venues. “This was a necessary flush,” he said. “The system was overextended.”

Offshore Venues Take the Hit

Unlike previous liquidation waves dominated by Binance, this one saw Hyperliquid and Bybit absorb most of the impact. Binance’s share of liquidations was smaller than usual, suggesting that risk-taking had shifted to offshore or newer derivatives platforms.

Meanwhile, CME, a key venue for institutional Bitcoin futures, maintained a larger proportion of open interest throughout the crash. Data from Coinglass now show CME, Binance, Bybit, and OKX as the top venues for Bitcoin futures by notional volume.

Despite the chaos, Bitcoin’s recovery was swift. By 13 October, the leading cryptocurrency was trading around $115,000, only 8% below its peak, while most major-cap altcoins rebounded sharply.

• Ethereum, XRP, and Dogecoin each climbed about 10% from their troughs.
  
• BNB surged 15.6% to a new all-time high of $1,375.11.
  
• Solana rose 8.3%, and Cardano gained 13%.
  

This rapid rebound signalled that while leverage was crushed, spot demand, particularly from ETF flows, provided an underlying floor.

Funding Flips Negative as Leverage Evaporates

The liquidation cascade triggered a sharp collapse in perpetual swap funding rates. Across Binance, Bybit, and OKX, funding turned negative or hovered near zero, a sign of aggressive deleveraging.

Data from Glassnode confirmed that aggregate funding reached its lowest level since the 2022 bear market, marking a comprehensive flush of excessive long positioning.

Altcoin perpetuals displayed even more dramatic behaviour. Solana’s eight-hour funding rate sank to -0.23% multiple times on 11 October, a rare scenario in which shorts were paying longs. This inversion reflected a wholesale shift from over-leveraged bullish positioning to defensive sentiment.

At the same time, basis compression, the narrowing gap between futures and spot prices, swept across dated contracts, signalling reduced speculative activity. By the weekend’s close, Bitcoin’s one-month futures basis had recovered to around 8% annualised on Deribit, a healthy sign that leverage had stabilised at sustainable levels.

ETF Flows and the Timing of the Crash

Interestingly, the deleveraging coincided with a pause in spot Bitcoin ETF inflows. Data from Farside Investors revealed that the week preceding the crash saw strong institutional buying through ETFs such as BlackRock’s IBIT and Fidelity’s FBTC.

• On 7 October, IBIT recorded $899.4 million in inflows.
  
• On 8 October, it added another $426.2 million.
  
• By 9 October, inflows slowed to $255.5 million, while FBTC posted a small $13.2 million outflow.
  
• On 10 October, the day of the crash, ETF flows flipped slightly negative, with total net outflows of $4.5 million.
  

This shift from consistent buying to modest outflows meant that spot demand softened precisely as derivative leverage was being unwound, exacerbating price volatility.

However, the following sessions saw ETF inflows resume, supporting Bitcoin’s rebound and underscoring the stabilising role of institutional spot demand.

Liquidity Gaps and the Aftermath

During the cascade, liquidity evaporated in thinly traded altcoin pairs. Some assets briefly printed near zero on certain exchanges due to cross-margin liquidations and thin order books. These flash crashes highlighted structural weaknesses in altcoin liquidity compared with Bitcoin’s deeper markets.

Bitcoin’s resilience stemmed from a strong ETF-backed bid and institutional depth, while altcoins, lacking such buffers, bore the brunt of collateral liquidations.

The purge ultimately flushed $65 billion in speculative leverage from the market in a single day. Analysts suggest that this reset, though painful, leaves crypto markets healthier and less fragile going forward.

With funding rates normalised, basis back to neutral, and forced sellers largely cleared out, the market appears to be entering a more sustainable consolidation phase.

The Bottom Line

The “Crypto Black Friday” liquidation cascade of 10 October may have been the most violent deleveraging in digital asset history, but it also served as a much-needed correction.

By wiping out excess leverage and resetting market positioning, the event has paved the way for a more stable and organic recovery. As derivatives funding stabilises and ETF inflows resume, both Bitcoin and major altcoins are showing signs of renewed resilience.

In short, while the weekend’s $20 billion wipeout rattled traders, it may well have strengthened the market’s foundation for the next phase of the cycle.