Presto Research, a crypto research firm, called the sell-off of 10 October 2025 the largest liquidation event on record. An exchange is a website where people buy, sell, and bet on coins. A liquidation is the moment an exchange closes a bet placed with borrowed money by force, because the trader's own money backing it has run out.
Bitcoin ended 10 October 2025 down 7.16% from the previous day's close. At its low that day, it was 12.05% down. In the invented example below, a fall of 12.05% ends any bet of 8 times the trader's own money (written 8x) or more.
What is a crypto liquidation? A crypto liquidation is when an exchange, the website where traders place these bets, force-closes a bet placed partly with borrowed money. It happens because the trader's own money backing the bet, called collateral, has fallen too low. The trader loses most of the collateral.
In our invented example, a Bitcoin bet at ten times the trader's own money is liquidated when the price falls 9.5% from the price at which the bet started.
A liquidation is a forced sale. Many at once push the price down further and set off more, which is called a cascade.
Presto Research called the 10 October 2025 sell-off the largest liquidation event on record.
What is a leveraged bet in crypto?
A leveraged bet is placed with borrowed money. The trader puts up some money of their own, called collateral. The exchange then lets them place a bet several times larger. The size of the bet is called the position.
The size of the borrowing is written as a multiple. A 10x bet means the position is ten times the collateral. A trader with $1,000 of collateral holds $10,000 of Bitcoin.
A mortgage has the same arithmetic. A house bought with a 10% deposit is a 10x position on the house price, so a 10% fall removes the deposit.
What are perpetual futures?
A future is an agreement to buy or sell something at a price fixed today. Most end on a set date. A perpetual future has no end date.
A long is a bet that the price will rise. A bet on a fall is called a short.
How does a crypto liquidation work?
The table uses invented round numbers. Bitcoin trades at $100,000. A trader puts up $1,000 of collateral and opens a 10x long, which is $10,000 of Bitcoin, or 0.1 Bitcoin. The price the trader bought at is called the entry price.
The table shows this bet at the start, after a 5% rise, after a 5% fall, and after a 9.5% fall.
Case | Bitcoin price | Position value | Gain or loss | Collateral left | Status |
|---|---|---|---|---|---|
Start | $100,000 | $10,000 | $0 | $1,000 | Open |
5% rise | $105,000 | $10,500 | +$500 | $1,500 | Open |
5% fall | $95,000 | $9,500 | -$500 | $500 | Open |
9.5% fall | $90,500 | $9,050 | -$950 | $50 | Liquidated |
Illustration with invented round numbers: $1,000 of collateral, a 10x long of 0.1 Bitcoin, and a forced sale when $50 of collateral is left. Not a real trade. Source: YX Insights
Read the last row first. At $90,500, the position is worth $9,050. The trader is down $950. Only $50 of collateral is left, so the exchange closes the bet.
A 5% rise gains $500, half the trader's $1,000. A 5% fall loses $500.
Our invented exchange rule is to force-close the bet when only $50 of collateral is left, which is 5% of the starting sum. That happens when the loss reaches $950.
Each Bitcoin has then fallen $9,500, to $90,500, a 9.5% fall. The price at which this happens is called the liquidation price. The exchange sells the 0.1 Bitcoin. The trader has lost at least $950 of the $1,000.
Chart 1 shows the same rule at four multiples: 2x, 5x, 10x, and 20x.
Source: YX Insights
A 2x bet needs a 47.5% fall to be liquidated. A 5x bet needs 19%, a 10x bet needs 9.5%, and a 20x bet needs 4.75%. The fall that sets off the liquidation, called the trigger fall, equals 95% divided by the multiple.
At high multiples, the liquidation price sits close to the entry price. A 20x bet bought at $100,000 is liquidated at $95,250.
What is a liquidation cascade?
A liquidation cascade is a chain of forced sales, each one pushing the price towards the next trader's liquidation price.
Add a second trader who puts up $500 and opens a 20x long on the same 0.1 Bitcoin. The same 5% rule force-closes it when $25 is left. That happens after a fall of $475, a 4.75% fall, at $95,250.
Suppose something pushes the price down 4.75%, to $95,250. The exchange sells the second trader's 0.1 Bitcoin into the market.
Suppose forced sales from many 20x traders then push the price from $95,250 to $90,000, an invented figure. The price passes the first trader's $90,500 liquidation price on the way down. That trader is liquidated. The forced sale pushes the price lower still.
Each liquidation adds orders to sell to a falling market. The fall can then reach the next group of traders. A trader betting on a fall is liquidated when the price rises instead.
What is a funding rate?
A perpetual future never ends. A payment between traders, the funding rate, keeps its price close to the spot price, the price of buying the coin itself today.
When the rate is positive, traders betting on a rise pay traders betting on a fall.
How big have crypto liquidations been?
Presto Research's report of 7 November 2025 gives no dollar total for the 10 October 2025 liquidations.
Our price data shows that day in Bitcoin.
On 10 October 2025, Bitcoin started the day at $121,716. It dropped as low as $107,048. It ended the day at $112,994. Measured from the previous day's close, the low was 12.05% down and the close was 7.16% down.
In our example, the 12.05% low ends a bet of 8x or more, including the 10x bet, but not a 5x bet, which needs 19%. Measured close to close, the 7.16% fall would end only bets of 14x or more.
Exchanges act on the price during the day, not the close. A trigger fall can be hit at the low, then recover by the close.
Measured close to close, the 10 October 2025 fall ranks 112th among the 4,678 price changes between daily closes since 1 January 2014, ordered from the largest fall. Chart 2 shows the eight largest, to 26 October 2026.
Source: YX Insights price data
The 10 October 2025 fall of 7.16% is not among the eight bars. The largest was 39.15% on 12 March 2020.
Our guide to Bitcoin volatility covers price swings. Bitcoin vs Ethereum vs Solana compares the three largest coins.
What does the example leave out?
The 5% rule is invented. Real exchanges set their own rules, which can differ by coin, by position size, and by exchange. The example leaves out trading fees and what happens to the last $50 of collateral.
Summary: what a crypto liquidation is
A crypto liquidation is an exchange closing a bet that borrowed money could no longer support. In our invented example, a 10x bet is gone after a 9.5% fall.
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Common questions about crypto liquidations
What happens when your crypto is liquidated?
The exchange force-closes your bet and sells it. A trader loses most of the collateral. In our invented example, a trader with $1,000 of collateral on a 10x bet is liquidated when Bitcoin falls 9.5%, from $100,000 to $90,500. Rules differ by exchange, so the amount returned, if any, varies.
What is a liquidation price?
A liquidation price is the price at which an exchange force-closes a leveraged bet. In our invented example, a 10x long bought at $100,000 has a liquidation price of $90,500. The higher the multiple, the closer the liquidation price sits to the entry price, the price the trader bought at. A 20x long has a liquidation price of $95,250.
What was the biggest crypto liquidation ever?
Presto Research called the 10 October 2025 sell-off the largest liquidation event on record, in its report of 7 November 2025. On that day, Bitcoin closed 7.16% below the previous close and traded 12.05% below it at the low. The report gives no dollar total, so we state none.
Why do liquidations make crypto prices fall faster?
Each liquidation is an order to sell. Extra orders to sell push the price down further. That fall can reach the liquidation price of the next trader, who is then sold out too. In our worked example, forced sales from 20x traders push Bitcoin past the 10x trader's liquidation price. The chain of sales is called a cascade.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
