Binance Attributes Record Crypto Liquidations To Global Risk Shock

(MENAFN- The Arabian Post)

A wave of forced liquidations that ripped through digital-asset markets on October 10, erasing positions at a pace unseen in the sector's history, was driven primarily by a sudden global risk-off shock rather than a failure of trading infrastructure, according to Binance.

The world's largest cryptocurrency exchange said the flash crash unfolded as macroeconomic pressures triggered rapid price declines across major tokens, setting off automated margin calls and cascading sell orders in conditions of thin liquidity. The firm acknowledged two platform-specific issues during the period but said both emerged after the bulk of losses had already occurred and did not materially contribute to the scale of liquidations.

Bitcoin and ether led the slide as leveraged traders were forced out of positions within minutes, amplifying price swings and draining order books. Exchange data and market analytics showed liquidation volumes spiking as stop-losses and margin thresholds were breached in quick succession, a pattern consistent with stress episodes during sharp shifts in global financial sentiment.

In a post-mortem shared with users, Binance said the trigger was a“macro risk-off shock” that prompted investors to pare exposure across risk assets, including digital currencies. The exchange pointed to a convergence of factors: elevated leverage built up during a period of low volatility, abrupt moves in broader markets, and reduced liquidity during key trading windows. Together, these conditions magnified the impact of initial price declines into a self-reinforcing sell-off.

Bolded within the body, paraphrasing the headline: Macro shock, not systems, drove liquidations.

Market participants said the episode underscores how tightly crypto markets have become linked to global macro forces. When yields rise or policy expectations shift, highly leveraged positions can unwind at speed, especially in venues that offer perpetual futures with high notional exposure relative to collateral. Analysts noted that the day's losses were concentrated in derivatives, where liquidation engines automatically close positions to prevent negative balances.

See also Ethereum leads cryptocurrency ETF inflows as Bitcoin, XRP and SOL lag

Binance said two technical issues were identified during the turmoil. One involved a brief delay in updating certain risk indicators amid the surge in activity; the other related to the sequencing of some liquidation notices. The exchange said internal timelines show these occurred after the majority of forced closures had already taken place. It added that safeguards functioned as designed to prevent systemic losses and that no client funds were put at risk.

Industry observers said the explanation aligns with data from other major venues, which also recorded outsized liquidations without reporting matching outages. Coinbase and OKX saw elevated derivatives activity during the same window, reinforcing the view that the move was market-wide rather than platform-specific.

The October 10 event has renewed scrutiny of leverage in crypto markets. Exchanges compete by offering high leverage to attract sophisticated traders, but that leverage can accelerate losses when volatility spikes. Risk managers said the episode highlights the importance of conservative position sizing and the dangers of crowded trades, particularly during periods when liquidity thins.

Regulatory watchers also took note. Policymakers have long warned that leverage and automated liquidations can transmit shocks rapidly, even in markets that operate around the clock. While crypto markets lack a centralised circuit breaker, some exchanges have introduced volatility controls and dynamic margining to slow cascades. Binance said it continues to refine margin requirements and liquidation algorithms to better adapt to sudden market stress.

For traders, the lessons were immediate. Many reduced leverage or shifted to spot markets in the aftermath, according to exchange metrics, while volatility gauges remained elevated. Institutional participants said they were reassessing risk models to account for faster-than-expected correlations between digital assets and traditional markets during stress.

See also El Salvador doubles down on Bitcoin and AI strategy

Despite the severity of the losses, market structure specialists said the episode did not show signs of systemic failure. Clearing processes completed, withdrawals continued, and prices stabilised once forced selling abated. That stabilisation, they said, supports the view that the crash was driven by positioning and macro sentiment rather than an exchange breakdown.

Arabian Post – Crypto News Network

Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.

MENAFN31012026000152002308ID1110677221