Digital assets suffered their largest one-day liquidations in history following concerns over a renewed global trade war, but recovered some losses in early trading.
Bitcoin experienced a major reversal this week, after concerns over a trade war kicked off cascading liquidations across the markets, compounded by profit-taking and high levels of leveraged trades
After last week’s new record high, Bitcoin dropped around 15% in 24 hours at the worst point of Friday’s market panic, as leveraged bets unwound
Bitcoin fell from a weekly high of $124,600 on Tuesday to a low of $109,220 on Friday; less than eight hours after it had been trading at $123,000
It subsequently recovered slightly as Trump dispelled the worst concerns after a few days of uncertainty, rallying to around $116,000 on Monday
Ether followed suit, gradually declining from a Tuesday high of $4,719 before crashing from $4,390 to $3,504 during the mass liquidation event on Friday
Altcoins were hit particularly hard after strong growth last week, with only seven of the top 100 projects by market capitalisation green at the time of writing
Overall market capitalisation dropped as low as $3.65tn, before recovering to the current $3.83tn
Despite the scale of liquidations, it should be noted that current levels are the same as late September, rather than any further regression
According to industry monitoring site DeFi Llama, total value locked in DeFi fell around $15bn to $158bn
Digital assets were shocked by president Trump’s unexpected threats of further tariff sanctions against China on Friday, catalysing a crash that led to the sector’s largest ever one-day liquidations before subsequently rallying as tensions eased
Traders across most major markets experienced significant losses, with stocks losing over $2tn after Trump posted indications he planned to increase tariffs on China due to dissatisfaction over their rare earth minerals policies
Analytics firm Coinglass called the subsequent market reaction (which equated to a nearly $500bn drop in market capitalisation at its lowest point) “the largest liquidation event in crypto history”
It noted that within 24 hours, over $19bn of bets were wiped out ($7bn of which in just one hour), liquidating more than 1.6 million traders
It appears that this global market crash was compounded in crypto by several other factors, causing cascading liquidations
It occurred within days of Bitcoin and the overall market hitting new record highs, making it easier for traders to take profit at the first sign of any market uncertainty
Perpetuals markets and leverage bets have grown significantly in digital assets over the last few months; the largest liquidations did not occur on leading CEXes Binance or Coinbase, but on top perpetuals exchange Hyperliquid, which proceed over $350bn of perpetuals trades in August alone
Several prominent industry figures identified the event as a “wake-up call” for leverage in the industry; analyst Nic Puckrin noted “it remains the only market that trades after hours... In this environment, thin liquidity, overleverage, and the involvement of big players make for a toxic cocktail”
Some analysts alleged that someone with insider knowledge of the tariff announcement may have taken advantage; a well-heeled “whale” trader opened massive shorts against Bitcoin shortly before the Trump announcement, netting a nine-figure windfall as the market crashed
However, although this represented the sector’s largest liquidation event by volume, it should be noted that due to the overall growth of the industry over the last few years, this volume still represented a far lower percentage drop than several other past liquidation events, most notably the 2020 Covid Crash
What happened: ETF News
How is this significant?
Digital asset investment products once again posted strong inflows, as traders flocked to Bitcoin during its recent record run
According to Coinshares data published on Monday, digital asset funds added $3.17bn during the trading week ending Friday the 10th
Additionally, year-to-date inflows reached an all-time high of $48.7bn “despite price corrections linked to US–China tariff tensions”, and trading volumes hit a record $53bn (including almost $16bn in Friday’s chaotic trading)
Coinshares head of research James Butterfill believes that traditional trading hours helped the ETFs avoid the worst of market reaction to the tariff threats, as “Friday saw little reaction with a paltry US$159m outflows”
Spot Bitcoin ETFs followed last week with another exceptional showing (before a meager $4.5m outflow on Friday), including a ten-figure inflow day
This occurred on Monday as the funds added over $1.2bn between themselves, including $970m for BlackRock’s IBIT and $112m for Fidelity’s FBTC
IBIT also posted the week’s second-best result, adding $899m on Tuesday, followed by $426m, $256m, and even a positive $74m despite the market meltdown on Friday
Bloomberg chief ETF analyst Eric Balchunas was effusive in his praise of IBIT on Wednesday, stating “$IBIT is #1 in weekly flows among all ETFs with $3.5bn which is 10% of all net flows into ETFs. Also notable is the rest of the 11 original spot Bitcoin ETFs all took in cash in the past week… Two steps forward mode [editor’s note: before presciently adding] Enjoy while it lasts”
He also noted that IBIT’s one year return despite the Friday crash is 84%, and it still sits close to (by far) the record for fastest fund to reach $100bn AUM “Inches away.. $IBIT got to $99.5bn last week before pullback. It could taste the extra digit. It’s still an inevitable milestone imo but wild just how close it got. Two steps forward, one step back in effect”
Spot Ether ETFs showcased slightly weaker performance as Bitcoin’s run to a new all-time high stole the spotlight—but they nonetheless featured two days of nine-figure inflows worth $182m and $421m
These figures were dominated by BlackRock’s ETHA, which added $93m, $438m, and $149m in fresh capital on the week’s first three trading days
The next-best performers were Fidelity’s FETH and Bitwise’s ETHW, neither of which posted a daily return above $30m
Ether funds featured far heavier outflows on Friday than their Bitcoin brethren, shedding $175m (led by $80m from ETHA)
In other ETF news, filings for crypto-related ETFs continue pouring in, with Bloomberg analyst James Seyffart paying particular attention to expected imminent approvals for Solana staking products, alongside funds for altcoins HBAR and Litecoin
CNBC reported on Monday that Citi Group seeks to introduce crypto custody services for clients in 2026, joining the likes of BNY Mellon and Standard Chartered as major global banks storing digital assets
Biswarup Chatterjee, services division global head of partnerships and innovation, told the channel “We have various kinds of explorations... and we’re hoping that in the next few quarters, we can come to market with a credible custody solution that we can offer to our asset managers and other clients”
He added that the bank is pursuing a hybrid approach in order to provide the best possible solution for different assets
“We may have certain solutions that are completely designed and built in-house that are targeted towards certain assets and certain segment of our clients, whereas may we may use a... third party, lightweight, nimble solution for other kind of assets”
On Friday, Bloomberg revealed that Citi has joined a banking coalition for a Euro stablecoin, alongside industry contemporaries like DekaBank, ING, and Unicredit
Citi is thus far the only non-European bank present in new entity based in the Netherlands, which aims to launch its Euro-denominated coin in the second half of next year
A recent report by Deutsche Bank posited that central banks may hold significant amounts of Bitcoin alongside gold in their reserves by 2030
According to analysts Marion Laboure and Camilla Siazon, “A strategic Bitcoin allocation could emerge as a modern cornerstone of financial security, echoing gold’s role in the 20th century. Assessing volatility, liquidity, strategic value and trust, we find that both assets will likely feature on central bank balance sheets by 2030”
They noted recent “de-dollarisation” of reserves, and argued this can help Bitcoin (with its predictable code-based supply mechanics) gain wider appeal
“The dollar’s share in global reserves slid from 60% in 2000 to 41% in 2025… The behavior we saw toward gold in the 20th century has clear parallels with how policymakers are now debating Bitcoin”
Laboure identified several shared characteristics of the two assets; “a low correlation with traditional assets, historically high volatility (although sharply decreasing for Bitcoin), and a role as a safe haven during times of instability”
Meanwhile, blockchain data firm Chainalysis crunched the numbers on the amount of crypto that may be available to governments via asset forfeiture, and estimated the figure at $75bn
CEO Jonathan Levin stated “This brings asset forfeiture potential to a completely different level to what we’ve seen in the past. It does change how countries think about that”
The bank’s treasury platform lead Carl Slabicki claims that tokenised deposits help banks “overcome legacy technology constraints, making it easier to move deposits and payments across their own ecosystems—and eventually, across the broader market as standards mature”
Tokenisation firm Securitize is reportedly going public via an SPAC merger with a firm founded by Cantor Fitzgerald, according to Bloomberg sources
The UK government plans to catalyse tokenisation initiatives within the country by appointing a “digital markets champion”
According to Treasury secretary Lucy Rigby, this new champion role will “lead, join up and coordinate private sector work on tokenizing wholesale financial markets in the UK”
Speaking at the Digital Assets Week conference in London, she added that they will work alongside a “Dematerialisation Market Action Taskforce” eliminating paper share certificates from the market, building on the government’s Wholesale Financial Markets Digital Strategy
SoftBank, one of the country’s largest investment managers, secured a 40% stake in Binance Japan via its digital payment processor subsidiary PayPay
Although a joint statement did not disclose the value of the investment, the companies confirmed they “aim to launch integrated services that will allow users to purchase crypto assets within the Binance app using PayPay Money and withdraw funds into PayPay Money”
This opens access to PayPay’s 70 million users and widespread merchant network for Binance, potentially allowing exchange users to directly pay for purchases via digital assets
Binance Japan GM Takeshi Chino commented “This strategic alliance represents a significant step toward the future of digital finance in Japan… By combining PayPay's extensive user scale with Binance's innovative technology, we will be able to make Web3 more accessible to people across the country and deliver secure, seamless digital assets services”
In other news of digital asset venture investments, Bitcoin life insurance firm Meanwhile secured an $82m funding round, featuring participation from Bain Capital, Haun Ventures, Apollo, Northwestern Mutual Future Ventures, and Pantera Capital
Bain Capital’s Stefan Cohen told Bloomberg “As the collateral and alternative asset gets better and better and more widely adopted, individuals will want financial products like life insurance that are not expressed in fiat terms that are expressed in Bitcoin terms”
The popular predictions platform allows users to wager on the outcome of real-world events, including within the realms of sport and politics
Polymarket first came to global prominence during the last US election, when it (or rather, its users) correctly predicted the outcome of a Trump victory far more accurately than traditional polling
ICE CEO Jeffrey Sprecher stated “There are opportunities across markets which ICE together with Polymarket can uniquely serve and we are excited about where this investment can take us”
Licenced Hong Kong crypto operator HashKey may go public this year, according to Bloomberg sources
The firm has reportedly confidentially filed for an IPO, which would make it the first crypto-native company to float since the city announced its aim to become a major regional crypto hub
The sources claim HashKey “could list as soon as this year” at a valuation of around $500m
If it does go public, HashKey could serve as a bellwether for crypto market demand in Asia, after the likes of Coinbase and Circle already proved investor appetite in North America
State Street published its digital asset outlook report on crypto this week, revealing the positive evolution of institutional attitudes towards the asset class
They have identified growing confidence in digital assets; 60% of institutional investors plan to increase their allocation in the coming year, and average exposure is expected to double within three years
A majority of respondents believed that “10–24% of institutional investments to be executed through tokenised instruments”, with private equity and fixed income identified as key candidates for the shift
Additionally, “40% of institutional investors have a dedicated digital assets team or business unit, and nearly a third say digital operations (e.g., blockchain) are now integral to their organisation’s wider digital transformation strategy”
Respondents listed numerous advantages behind the shift towards digital assets, including transparency (i.e. visibility of key data), faster trading, and reduced compliance costs
Around half believe that adopting digital asset infrastructure can cut costs by around 40%
State Street’s investment services president Joerg Ambrosius commented “The acceleration in adoption of emerging technologies is remarkable. Institutional investors are moving beyond experimentation, and digital assets are now a strategic lever for growth, efficiency, and innovation”
Chief product officer Donna Milrod added “Clients are rewiring their operating models around digital assets… The shift isn’t just technical—it's strategic”
National broadcaster Radio-Television Luxembourg reported that this signalled “a significant shift” for the Grand Duchy, usually viewed as a fiscally conservative nation
Director of the Treasury Bob Kiefferexplained the move thusly; "Recognising the growing maturity of this new asset class, and underlining Luxembourg’s leadership in digital finance, this investment is an application of the FSIL's new investment policy”
This new policy allows allocation of up to 15% of FSIL’s capital towards alternative investments such as crypto
He added that they are "sending a clear message about Bitcoin’s long-term potential" and that “ETFs allow us to avoid the risks associated with holding Bitcoin directly”
Local MP Laurent Mosar applauded the move, saying “As a country with a long-term vision, this is a logical step. It sends a strong signal to institutional investors”
What happened: Stablecoin news
How is this significant?
A consortium of major international banks including Bank of America, Citi Deutsche, Goldman Sachs, Santander, BNP Paribas, MUFG, TD Bank Group, and UBS are jointly exploring “a 1:1 reserve-backed form of digital money that provides a stable payment asset available on public blockchains”
In particular, the proposed coin would be pegged to G7 currencies reflected by the wide geographic spread and regulatory knowledge of the banks
In a new research note, JP Morgan analysts eschewed concerns that stablecoins could undermine the US Dollar, arguing “Rather than accelerating de-dollarisation, growth in stablecoin adoption has the potential to reinforce the dollar’s role in global finance”
Their strategists forecast a (very) wide range for the potential market capitalisation of stablecoins by 2027; US rates strategists predict a $500bn value, whilst emerging market equity strategists predict a $2tn market
Scott Lucas, global head of markets digital assets at JP Morgan, told CNBC on Monday that the bank is exploring stablecoins alongside its existing proprietary blockchain; “There’s a real opportunity for us to think about how we can offer different services for our clients on the cash side, as well as responding to client demand to do things on stablecoins”
However, he cautioned “that strategy is still emerging because it’s only really been a few months since we’ve had some more clear regulation around what the opportunity looks like”
The “Roughrider Coin” would be issued by the state-owned Bank of North Dakota, with CEO Don Morgan commenting “We see this affecting the industry and continue to affect the industry, and so we’re getting involved”
North Dakota governor Kelly Armstrong added “As one of the first states to issue our own stablecoin backed by real money, North Dakota is taking a cutting-edge approach to creating a secure and efficient financial ecosystem for our citizens”
Founder Michael Saylor remained unperturbed by short-term price action, tweeting “No tariffs on Bitcoin” in response to market panic over possible global trade wars
Chairman Tom Lee stated “The crypto liquidation over the past few days created a price decline in ETH, which BitMine took advantage of”, as it added over 202,000 Ether at a cost of around $828m
Lee added “Volatility creates deleveraging and this can cause assets to trade at substantial discounts to fundamentals, or as we say, 'substantial discount to the future' and this creates advantages for investors, at the expense of traders”
Binance founder Changpeng “CZ” Zhao’s family office, YZi Labs, will invest $200m into BNB alongside China Renaissance, according to Bloomberg sources
Bitcoin experienced a major reversal this week, after concerns over a trade war kicked off cascading liquidations across the markets, compounded by profit-taking and high levels of leveraged trades
After last week’s new record high, Bitcoin dropped around 15% in 24 hours at the worst point of Friday’s market panic, as leveraged bets unwound
Bitcoin fell from a weekly high of $124,600 on Tuesday to a low of $109,220 on Friday; less than eight hours after it had been trading at $123,000
It subsequently recovered slightly as Trump dispelled the worst concerns after a few days of uncertainty, rallying to around $116,000 on Monday
Ether followed suit, gradually declining from a Tuesday high of $4,719 before crashing from $4,390 to $3,504 during the mass liquidation event on Friday
Altcoins were hit particularly hard after strong growth last week, with only seven of the top 100 projects by market capitalisation green at the time of writing
Overall market capitalisation dropped as low as $3.65tn, before recovering to the current $3.83tn
Despite the scale of liquidations, it should be noted that current levels are the same as late September, rather than any further regression
According to industry monitoring site DeFi Llama, total value locked in DeFi fell around $15bn to $158bn