Not a Black Swan

notes from the Oct 10–11, 2025 crypto flush

I’m starting this blog to talk about crypto—but not only crypto. I want to write about everything around money, markets, and the choices we make.

Yesterday brought one of the biggest crypto deleveraging events in years. Approximately 1,618,240 trader accounts were liquidated (per Coinglass-style tallies). Adding up reported liquidations gives about $18.75B over 24 hours. Scary numbers. One policy move from the U.S. against China, and global markets got an early Black Friday.

Search the web and you’ll find stories: people who lost money—sometimes cars, houses, assets in general—people who were terrified, and a smaller group who made money amid the chaos. This isn’t a unique “crisis”; it’s how global markets discount new information into prices. Events like this rarely come with a neat justification; they emerge from structure and behavior.

Today feels different in important ways. There are more players, deeper liquidity, and legacy finance is, day by day, closer to the crypto market and its ecosystems. Below is a short, dated history of major drawdowns for context.

Major crypto crashes & contagion episodes (2014–2025)

• Feb 2014 — Mt. Gox collapse (exchange failure): trading halted; bankruptcy after ~650k–850k BTC went missing; confidence cratered.
• 2018 — Post-bubble bear market: Bitcoin ended the year down >70% from its open; broad drawdowns across crypto.
• Mar 12, 2020 — “Black Thursday” (COVID shock): liquidity vanished; cascading liquidations; BTC fell roughly ~50% intraday.
• May 19, 2021 — China crackdown + deleveraging: regulatory headlines triggered a sharp, sector-wide plunge (intraday BTC around −30%; near $1T market-cap wipe at one point).
• May 9–12, 2022 — Terra/UST depeg: UST lost its peg; LUNA’s death spiral erased ~$50B in ecosystem value.
• Nov 6–11, 2022 — FTX bank run & bankruptcy: ~$6B withdrawals in 72h; Chapter 11 on Nov 11; broad contagion.
• Mar 10–13, 2023 — USDC depeg (SVB exposure): USDC traded as low as $0.87 before re-pegging after policy backstops.
• Aug 17, 2023 — Derivatives flush: roughly $1B in liquidations over 24h; classic leverage clear-out.
• Oct 10–11, 2025 — Tariff shock + derivatives cascade: after a threat of 100% tariffs on Chinese imports, crypto sold off hard; reports flagged >$6B liquidated in a single hour and ~$19B over 24h; BTC traded near $105k at the lows.

I’ve lived through a few of these. In one, I had real skin in the game—but that’s for another day. Let’s focus on the latest move, Oct 10, 2025. It’s fresh; we’ll see the follow-through starting Monday. The dollar jumped, and stocks fell:

• U.S. stocks: S&P 500 −2.7%, Nasdaq −3.6%, Dow −1.9% (worst day since April). Semiconductors led declines; SOX −6.3%.
• Nvidia (NVDA): down >2% with the chip complex as traders priced in higher U.S.–China friction and tighter checks on AI chip shipments.

The mechanism: trigger vs. fuel

Trigger (macro): a geopolitical shock (tariffs/export controls) that reprices risk quickly.
Fuel (micro): crowded leverage + thin liquidity at key levels → stops → margin calls → forced selling → bigger price gaps. This reflexive loop is why crypto often moves faster than equities on headline shocks.

Plain-English gloss

• Open interest (OI): outstanding perp/futures contracts; when high, there’s tinder for a fire.
• Funding: periodic payments that align perps to spot; extreme readings often mean crowding.
• Liquidity gaps: price zones with few resting orders; cascades accelerate here.

Timeline (UTC → São Paulo, UTC-3)

• ~19:00–22:00 UTC, Fri Oct 10 (≈ 16:00–19:00 São Paulo): policy headlines cross; risk assets wobble.
• ~21:23 UTC (≈ 18:23 São Paulo): peak liquidation hour reported (> $6B in the past hour).
• Into Sat, Oct 11: ~$19B liquidated over 24h as the deleveraging completed.

How many people were hit?

The cleanest proxy is liquidated trader accounts. Press tallies cite ~1.6–1.7 million accounts liquidated across the window. This measures derivatives participants, not every holder who saw drawdowns.

My take: this wasn’t a Black Swan

Using Taleb’s three tests—outlier to your model, extreme impact, and post-hoc rationalization:

• Impact: yes—record liquidations and a brief stablecoin wobble.
• Rationalization: yes—after the fact, tidy stories appear (“tariffs → crash”).
• Model surprise: debatable. If your framework already monitored OI/funding/liquidity and assigned non-zero odds to a headline shock, this wasn’t outside the model. It looks like a fat-tail event in a known Extremistan domain—more Gray Rhino (obvious macro risk) meeting Dragon-King dynamics (self-reinforcing microstructure).

Side note: classifying COVID-19 as a “Black Swan” is debated; many—including Taleb—argue it wasn’t, because pandemics were a known, modelable risk.

Behavior over blame

A lot of pain came from no risk plan: weak sizing, excess leverage, no invalidation, and no de-risking rules around policy events. Blaming “the market,” exchanges, or politicians won’t fix a P&L. Owning process might.

BONUS — What I’m changing in my playbook

• Event rule: pre-define a de-risking window before binary macro catalysts (tariff posts, ETF rulings, shutdown/FX shocks).
• Objective triggers: if OI is elevated and price loses a mapped liquidity shelf, cut risk automatically—no narratives, just rules.
• Overnight posture: no un-hedged leverage into illiquid sessions without hard stops, alerts, and conditional orders.
• Stablecoin stress checks: track peg stability on major venues; treat peg/basis breaks as market-wide risk signals.

This post is for study and discussion, not financial advice.

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