A year after the October 10 crash: $19 billion in liquidations and three lessons for arbitrage traders

A year after the October 10 crash: $19 billion in liquidations and three lessons for arbitrage traders

Exactly a year ago, on October 10, 2025, the market went through the largest crash in its history. After Trump's statement on tariffs on Chinese goods, about $19 billion in positions were liquidated within a day.

That day is worth remembering, and not for the drama. It exposed the weak spots of almost every strategy, including those considered neutral.

Lesson one: the price on one exchange is not the market price

At the height of the crash, the USDe stablecoin fell to about 65 cents on one major exchange, even though it held around a dollar on other venues. Positions that used it as collateral were liquidated at the local price.

From what we see, it was these local depegs that produced the widest spreads that day. But only a handful made money on them, and those whose collateral was valued at a single venue's price lost.

Lesson two: the hedge leg can disappear

Some exchanges triggered auto-deleveraging. Profitable positions were forcibly closed to cover the losses of liquidated ones, and many trades lost exactly the leg that protected them from the move.

Lesson three: under stress, transfers stall

When networks and exchanges are overloaded, withdrawals get delayed and sometimes suspended. A spread that looked like free money couldn't be closed with a transfer.

What has changed in a year

Exchanges revised collateral valuation and auto-deleveraging mechanisms, and many traders cut leverage. In our view, the market has become more cautious, but cascades haven't gone anywhere: on October 8 this year alone, liquidations again topped a billion.

We believe the main lesson of that day remains the same. A neutral trade is only neutral while both its legs are alive, so leverage on them should be low, capital should be spread across venues in advance, and each exchange's auto-deleveraging rules should be known before they kick in.

Our tools

Local price depegs on a single exchange only show up when you compare all venues in real time. Our arbitrage screener keeps dozens of venues in one window, refreshes quotes every second and shows each gap together with the volume actually behind it. The spread calculator helps you check what survives fees, network costs and slippage at your size. The bot is fully manual. It never connects to your exchange API keys.

To test the tools on a live market, ArbitrageScanner offers one day of free access to the whole ecosystem.

FAQ (Frequently Asked Questions)

1. What happened on October 10, 2025?

The largest crash in crypto market history. After a statement on tariffs on Chinese goods, about $19 billion in positions were liquidated within a day.

2. What happened to USDe?

On one major exchange it fell to about 65 cents, even though it held around a dollar elsewhere. Positions collateralized by it were liquidated at the local price.

3. What is auto-deleveraging?

A mechanism where the exchange forcibly closes profitable positions to cover the losses of liquidated ones. That's how many trades lost their hedge leg.

4. How can a trade be protected from a day like that?

Low leverage on both legs, capital pre-positioned on both venues, collateral not in a single asset, and knowing each exchange's auto-deleveraging rules.

Conclusion

A year ago the market lost about $19 billion to liquidations in a day. That day showed that the price on one exchange can break away from the market, the hedge leg can disappear, and transfers stall under stress.

For arbitrage, the lesson is the same: a trade is neutral only while both legs are alive. Low leverage, capital on both sides and knowing each exchange's rules matter more than how wide the spread is at the height of panic.

IMPORTANT! We are software developers. We do not give recommendations or promises of earnings and we do not advise you to invest your money anywhere. Our software is fully manual, all your money stays under your own control. We show examples of how our clients have earned on arbitrage in the past, but we do not advise repeating those actions one to one. Your earnings depend solely on your own actions and on market factors.