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On October 10, 2025, Bitcoin (BTC) plummeted from about $122,000 to $102,000 in less than an hour. This was one of the largest liquidation events in crypto history, with over $19 billion of leveraged positions wiped out across exchanges. Some traders watched in disbelief as BTC briefly dipped below $100,000, then recovered hours later.
summary
- On October 10, 2025, Bitcoin fell from about $122,000 to about $102,000 in less than an hour, erasing more than $19 billion in leveraged positions, but briefly fell below $100,000 before recovering.
- For companies and traders using BTC as collateral for loans, automatic liquidation systems ensured profits during the crash and maintained liquidity without selling.
- The importance of decentralized data: Chainlink’s oracle pricing prevents unnecessary liquidations by providing unbiased market references and demonstrates how reliable data feeds enhance risk management in volatile markets.
While many saw nothing but confusion, this event revealed something deeper about how BTC-backed lending functions as both a funding tool and built-in risk management.
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The financing dilemma: sell or borrow?
Imagine you run a company that holds $1 million worth of BTC vaults that were built earlier this year as part of a broader balance sheet strategy. You purchased Bitcoin in April 2025 for approximately $80,000 per coin, considering it both a store of value and a diversification of your cash reserves. While we are bullish for the long term, we need liquidity to cover monthly operating costs such as payroll, marketing, and product development.
You are now faced with the classic question of how to most efficiently finance your business. There are two options:
Option 1 – Sell some of your BTC every month
This gives you cash, but reduces your BTC exposure and future upside potential. Suppose you sell BTC every month at the following price:
This approach provides short-term funding, but requires you to give up valuable assets.
Option 2 – Borrow BTC from Treasury
Instead of selling, use your BTC as collateral and borrow Tether (USDT) or fiat through a lending platform. As you increase your loan a little bit every month, the liquidation price (the level at which your BTC is automatically sold to pay off your loan) will gradually increase.
This price effectively acts as a stop loss. If BTC falls below that price, the collateral will be automatically liquidated. This structure allows you to continue investing while using your BTC holdings as working capital, turning long-term confidence into short-term liquidity.
what happened during the crash
One trader used exactly this structure. By early October, their BTC-backed loans reached a liquidation level of approximately $115,000. When the flash crash occurred on October 10th, an automatic liquidation system was activated near that level.
At first glance, liquidation sounds negative. But in this case, you actually made a profit. BTC was purchased for $80,000 a few months ago. I was automatically sold for $115,000 before the entire market collapsed, closing out my position at a significant profit.
The system worked exactly as intended. It protected capital, maintained liquidity, and turned what could have been a margin call into a disciplined exit.
The role of oracles: Chainlink data matters
The liquidation relied on Chainlink’s oracle pricing, which aggregates data from several major exchanges to create a reliable market average. During the crash, BTC briefly fell below $100,000 on some exchanges, especially those with thin order books.
However, Chainlink’s feed remained around $104,000 to $105,000, reflecting a fairer market level. This difference is important. By using decentralized oracle data, the system avoided unnecessary liquidations that could be caused by temporary mispricing on one exchange.
This is a key example of how automated lending and reliable data feeds can reduce risk even in rapidly changing markets.
Lessons learned from October’s flash crash
The events of October 10th reminded everyone that leverage in cryptocurrencies is both powerful and dangerous.
But we also showed that properly structured asset-backed financing can turn volatility into your friend.
- Liquidation does not necessarily mean loss. In some cases, this means that your profits are automatically locked in.
- Automated execution outperforms manual counterparts in fast markets.
- Properly managed BTC Treasuries provide safe access to liquidity even in extreme conditions.
The October 2025 crash was more than just a market shock. This was a real-world stress test of how the right financial infrastructure can improve risk management.
Disclosure: This article does not represent investment advice. The content and materials published on this page are for educational purposes only.
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Gleb Kurovsky
Gleb Kurovsky He is a leading fintech innovator and chief digital officer at Luminary Bank, specializing in blockchain, AI, and payments. With eight years of experience in finance, including a tenure as chief economist at a central bank and a PhD at EPFL, one of the world’s leading technical universities, Gleb combines deep academic expertise with practical experience in building high-impact financial systems. Gleb is widely known for his vision at the intersection of finance and technology. A finalist in the Weighing Games World Econometrics Championship, he continues to shape the future of digital finance by exploring the programmability of money and building the next generation of fast, high-yield, and reliable financial systems.
