Liquidity across major crypto markets has remained thin and fragmented since the Oct. 10 crash, with wider spreads and weaker order books blamed for bitcoin’s slide from about $125,000. Binance has rejected some market participants’ claims that an internal failure caused the crash, while critics say the exchange’s limited disclosure has fueled distrust and conspiracy theories. Market makers and industry leaders say the day’s events exposed structural weaknesses in crypto market depth and reliance on leverage, suggesting the problem extends beyond any single exchange and warrants regulatory-style scrutiny. At first glance, the $19 billion liquidity wipeout on Oct. 10 looked routine: a rapid chain of liquidations, or forced closures of trading positions, across major exchanges as bitcoin (BTC), the largest cryptocurrency, tumbled.
The world’s largest crypto exchange has, for many, become the face of the crash, which saw bitcoin drop as much as 12.5%, the most in 14 months. Binance maintains that Oct. 10 was not the result of an internal systems issue. The company described the event as driven by “market factors,” citing macroeconomic pressure, high leverage, illiquid conditions and congestion on the Ethereum network. Binance said its core systems remained operational and it paid roughly $283 million in compensation to affected users.
For some, that explanation isn’t enough, particularly given the scale of liquidations, and the $19 billion figure has taken on an outsized symbolic weight. “This is a joke,” wrote the pseudonymous Bitcoin Realist on X, saying you liquidated 19 billion on 10/10 alone and that this is like spitting in our faces. The anger reflects something broader than a single volatility event. For many, Oct. 10 has become a proxy for distrust in crypto market structure.
What’s missing is a public review and official narrative. Critics argue that the absence of a detailed inquiry leaves room for speculation to snowball. Salman Banaei, a former regulator at the U.S.’s Commodity Futures Trading Commission (CFTC), suggested Oct. 10 warrants investigation, even without alleging wrongdoing. “Whether you love or hate crypto, there should be an investigation by regulators into Oct 10, 2025,” Banaei wrote, comparing it to the May 6, 2010, stock market flash crash. He was careful to note he was not claiming manipulation occurred.
One trader, known as Flood, insinuated that a major exchange had been relentlessly selling altcoins since Oct. 10, feeding conspiracy theories about inventory overhang. Whether true or not, such claims tend to flourish when liquidity disappears and confidence erodes. The deeper issue is market depth, not one exchange. Oct. 10 may ultimately be remembered less for the liquidation number than for what it revealed about market structure.
In a bull market, order books are thick, leverage builds quietly, and liquidity is abundant. Bear markets expose the opposite. Liquidity thins, market makers retreat, volatility concentrates, and the next shock breaks through faster than expected. Binance is the easiest scapegoat because it’s the largest exchange and thus the most visible venue and obvious target. But the deeper issue is structural. Crypto liquidity remains dependent on leverage, conditional market making and confidence, all of which have been lost in a void over the past four months.
“I don’t know if Binance played a role in deliberately ruining the market in October,” said Eric Crown, former options trader at NYSE Arca, “I would probably veer more towards the obvious which is high amounts of leverage, low amounts of liquidity, generally useless or unwanted altcoin technologies is a recipe for a massacre and that’s exactly what happened.” It was always a question of when, not if.
Leave a Reply