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Bitcoin's 8% Plunge: What Triggered the $19 Billion Avalanche?

Bitcoin's 8% Plunge: What Triggered the $19 Billion Avalanche?

Published on: 10/11/2025

Bitcoin's 8% Plunge: What Triggered the $19 Billion Avalanche?

I. Key Data of the Crash

Key Metrics

  • Maximum BTC drop: 9% (from $121,500 to $109,000)
  • Global liquidations: 1.644 million users
  • Total liquidation amount: $19.216 billion
  • Largest single liquidation: $8.534 million (Binance BTCUSDT)
  • Most intense period: 03:00–05:00, with a $10,000 drop in 2 hours

II. Three Core Causes of the Crash

Cause 1: Stock Market Crash Spreads Risk Aversion (40%)

Impact
  • Market performance:
    • Dow Jones: Fell more than 2.5% in one day
    • NASDAQ: Tech stocks led the drop, falling over 3%
    • Trump's tariff threats heightened trade tensions
    • Rising recession fears and tightening liquidity
  • Transmission path: Stock market crash → Decreased risk appetite → Funds withdrawn → Pressure on cryptocurrencies → BTC leads the decline

Cause 2: Binance Stablecoin Decoupling Triggers Panic (30%)

  • Event sequence:
    • 02:30 AM: Binance’s stablecoin temporarily decoupled
    • 03:00 AM: Massive withdrawals occurred, with stablecoins trading at a premium against USDT
    • 03:30 AM: Concerns about stablecoin security triggered a sell-off
  • Cascading effect: Trust crisis → Liquidity squeeze → Panic selling → Prices plunged further

III. Liquidation Data Analysis

Overview of Liquidations

  • Total liquidation amount: $19.216 billion
  • Long position liquidations: $13.67 billion (71.1%)
  • Short position liquidations: $5.546 billion (28.9%)
  • Average individual loss: $11,686
  • Binance’s share of total liquidations: $8.5 billion (44%)

Leverage Distribution

Exchange
  • High-leverage users (20x and above): Accounted for 55% of total liquidation value, but only 37% of liquidation users
  • Users with leverage over 50x: Nearly all wiped out

IV. Technical Analysis

Key Support Levels Breached

Asset
  • $118,000 → Broke the 20-day moving average
  • $115,000 → Broke the 50-day moving average
  • $112,000 → Broke through the previous consolidation zone
  • $109,000 → Reached the 100-day moving average (panic bottom)

Technical Indicators

  • Volume increased 3.4x, typical panic selling
  • RSI dropped to 18 (extremely oversold), high probability of a technical rebound
  • MACD formed a death cross, but the weekly trend is not fully broken

V. Market Outlook

Short-term Trend (3-7 Days)
Support Levels

  • Strong support: $105,000–$108,000
  • Medium support: $112,000–$115,000
  • Weak support: $100,000

Resistance Levels

  • First resistance: $115,000
  • Second resistance: $118,000
  • Third resistance: $121,000–$124,000

Three Scenarios

  1. Technical rebound (50%): Support at $105,000, rebound to the $115,000–$118,000 range
  2. Double bottom (30%): Test $105,000 or even $100,000 again
  3. Quick V-shaped recovery (20%): Large capital funds buy the dip, recovering quickly to $120,000

VI. Investment Strategy Recommendations

Risk Assessment
The current market is highly risky. Recommendations:

  • Lower positions, limit leverage to 3x
  • Choose top-tier exchanges and diversify assets
  • Set reasonable stop-loss levels
  • Avoid high-risk stablecoins

Strategies for Different Investors

  • Conservative investors: Significantly reduce positions to below 30%, avoid leverage, buy in batches, mainly in cash
  • Balanced investors: Maintain 50% position, swing trade, use low-leverage contracts (not exceeding 3x)
  • Aggressive investors: Actively capitalize on both directions, use 3-5x leverage, strict stop-loss, quick entry and exit

VII. Performance of Quantitative Strategies in Extreme Market Conditions

DCAUT Trend Strategy
The DCAUT trend quant strategy performed steadily during the crash, successfully capturing short opportunities:

Strategy 1
  • October 11, 03:30 AM: Identified a downtrend signal and opened short positions
  • Price range: ETH from $3,951 → $3,773
  • Multiple profitable short positions: Maximum single position gain of +11.96%
  • Maximum drawdown: Controlled below 3%
  • Strategy advantages: Automated execution, emotional isolation, bidirectional trading, controllable risk
Strategy 2

DCA Smart Investment System: Value of the Anti-Waterfall Mechanism
Traditional DCA strategies revealed fatal flaws during this crash. Many investors using conventional DCA systems kept buying as BTC fell from $121,500 to $109,000, failing to avoid risks, and "catching knives" in the waterfall drop, resulting in massive losses.

The intelligent DCA system equipped with the anti-waterfall mechanism performed excellently, protecting investor funds effectively.

Fatal Flaws of Traditional DCA

  • Fixed interval mechanical buying (e.g., every hour or every 4 hours)
  • No consideration for market trends or volatility
  • Continued buying during a price drop, attempting to "average down"
  • No risk recognition or stop-loss mechanism

Anti-Waterfall Mechanism of Smart DCA
The system features intelligent risk recognition, able to monitor market volatility:

  • Downtrend + high volatility: Automatically pauses new positions
  • Protects existing positions, avoiding additional purchases during downturns
  • Waits for market stabilization before resuming regular investment

Key Benefits

  1. Higher security: Protects funds during extreme market conditions
  2. Optimized risk-reward ratio: Reduces average cost while controlling exposure
  3. Automated risk management: Real-time monitoring without emotional decisions
  4. Adapts to different market environments: Adjusts for bull, bear, and volatile markets

Conclusion
This BTC crash demonstrates that in highly volatile markets, traditional "Dollar-Cost Averaging" is no longer sufficient. Smart risk management is key. The anti-waterfall mechanism aims to protect funds and optimize costs in extreme conditions. As Warren Buffett said, "The first rule of investing is don’t lose money, and the second rule is never forget the first rule." Survival in the crypto market is crucial for future opportunities.

VIII. Conclusion

This crash was a result of a combination of factors—stock market decline, stablecoin decoupling, and liquidity pullbacks—leading to 1.64 million liquidations and $19.2 billion in losses. Despite panic selling and technical support failure, quantitative strategies demonstrated stability and discipline. Investors should exercise caution, reduce leverage, and build a robust risk management system in this volatile market.

Future Outlook
Future

Historical Insight: After major crashes, the market typically takes 3-12 months to recover, but with liquidation amounts at an all-time high, the extent of leverage usage in this crash was unprecedented.

Disclaimer: This report is based on publicly available market information and is for reference only. It does not constitute investment advice. Cryptocurrency investments are highly risky and may result in the loss of principal. Investors should fully understand the risks and make decisions cautiously based on their individual circumstances.

Report Date: October 11, 2025
Data Sources: TradingView, CoinGlass, Exchange Public Data
Analysis Team: DCAUT Quantitative Analysis Team

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