🧨Crypto Black Friday? When too much leverage and thin weekend liquidity meet. All crypto boom cycles end in the same way: greed meets math. - Nearly $1 Trillion in market cap vanished. - Over $20 Billion in leveraged positions liquidated. - This was one of the worst days in crypto’s history, and while it started quietly, it's fault is a tale as old as time: Leverage. 🕕Full timeline - October 9th, 13:00 GMT China quietly announced new export controls: Any product containing more than 0.1% Chinese rare-earth materials now requires Beijing’s approval before re-export. - October 10th, 20:00 GMT Mysterious traders began opening massive short positions on Hyperliquid (a decentralized perpetual-futures exchange). Bitcoin (BTC) fell from $121 K → $117 K. - October 10th, 20:57 GMT Donald Trump, via Truth Social, announced a 100% tariff on Chinese goods, citing China’s rare-earth restrictions. Crypto markets imploded: - BTC plunged to $104 K in 20 minutes (-15%) - Solana (SOL) dropped ~40% - USDe (Ethena a synthetic yield protocol) depeg by nearly 50% - Cosmos (ATOM) nearly went to zero Market mechanics broke Open interest (the total size of active leveraged positions) across all exchanges halved in hours: - BTC OI: $67 B → $33 B - ETH OI: $38 B → $19 B - Altcoins OI: $43 B → $31 B Exchanges were forced to trigger Auto-Deleveraging (ADL) — a last-resort mechanism that automatically closes traders’ profitable positions to prevent systemic losses. Hyperliquid (decentralized derivatives platform) and most CEXs engaged ADL Lighter, (a competing exchange) avoided ADL but went offline for several hours under record traffic DeFi Stress Tests Amid the chaos, major decentralized-finance protocols were tested: - Aave (lending protocol) liquidated a record $180 M in collateral automatically, with zero downtime - Morpho (p2p lending protocol) handled ~$100 M in liquidations, no bad debt - USDe (Ethena’s synthetic stablecoin) dropped as low as $0.62, while USDT (Tether) traded at a premium as traders fled to perceived safety Fallout & Lessons - Using leverage is an extremely risky business, especially in crypto markets where the - Rumors suggest some smaller exchanges and market makers may not survive this event. - The next few days will reveal who was overexposed and who built resilient infrastructure. The bottom line In crypto, no one’s coming to save you, It’s a truly open market 24/7, borderless, and mercilessly fair. When the math stops working, positions don’t get rescued they get liquidated. This is unlike TradFi where Citadel can call Robinhood to stop gamestop trading because their short is a few billion dollars underwater. We've replaced trusting people to trusting math, and that is always more fair. To note: the protocols that stayed functional today earned credibility money can’t buy.