Crypto Market In 'Fear' As Index Shows Investor Caution

The recent crypto market crash on October 10 marks the largest liquidation event in the history of digital asset trading, with over $19 billion forcibly liquidated in a matter of minutes. This unprecedented event triggered a cascade of liquidations, causing a dramatic $65 billion decline in open interest and highlighting vulnerabilities in crypto infrastructure and market stability. As the industry grapples with the fallout, experts point to technical flaws and possible coordinated attack vectors as key contributing factors to this historic downturn.

A Market Collapse of Historic Proportions

The crash on October 10 shattered previous records for liquidation volume, with more than $19 billion wiped out in a matter of minutes, according to market data. The liquidation wave resulted in a $65 billion drop in open interest across derivatives markets, exceeding past liquidity crises such as the COVID-19 crash and the collapse of FTX.

Market analysts have identified vulnerabilities in Binance’s pricing oracles as a potential catalyst. These oracles, which determine the value of certain pegged tokens like USDE, bnSOL, and wBETH, relied on internal data — not external oracles — increasing risk during market stress. These internal valuations are central to Binance’s “Unified Accounts” feature, making users susceptible to liquidation during irregular trading conditions.

While evidence of a coordinated attack remains inconclusive, the data indicates suspicious behavior. Notably, USDE experienced substantial liquidations, accounting for about $346 million, with other tokens like wBETH and bnSOL also heavily affected. The mass withdrawal of liquidity on stablecoin pairs adds a layer of suspicion, hinting at possible manipulation or strategic market moves.

Unprecedented Market Dislocation and Anomaly Detection

Using detailed analytics from Rena Labs, a leading AI-driven market analysis firm, researchers detected one of the most severe and complex dislocations ever observed in stablecoin trading. Despite the USDE peg being intact, liquidity evaporated rapidly. Total liquidity on Binance declined from an average of $89 million to just $2 million in under 20 minutes, with bid-ask spreads widening to 22%, and nearly complete market depth disappearing.

During the crisis, trading activity surged exponentially — nearly 16 times higher than normal — with almost 3,000 trades per minute, predominantly sell orders. This panic-driven trading, combined with stop-loss triggers and forced liquidations, accelerated the liquidity collapse.

Signs of Pre-Crisis Anomalies

Rena’s anomaly detection system identified unusual activity hours before the liquidity crisis. At around 21:00 UTC, it recorded 28 anomalies, including spikes in volume, price deviations, and suspicious trade patterns such as spoofing — where traders manipulate markets by placing deceptive orders to influence prices.

Order book analysis revealed three large-volume order “volleys” just before the collapse, hinting at targeted manipulation when Bitcoin was already declining but before USDE liquidity vanished. These events underscore the fragility of crypto markets, where leverage and leverage-fueled liquidations can wipe out seemingly stable trades and expose systemic weaknesses, especially where market makers like Wintermute are absent.

This incident emphasizes the importance of robust risk management and reliable oracles in blockchain-based finance. As the crypto industry faces increasing scrutiny over its infrastructure, the October 10 crash serves as a stark reminder of the ongoing vulnerabilities within digital asset markets.

Source: CryptoSlate

Federal Reserve Chairman Jerome Powell outlined the Fed's future monetary policy, indicating potential shifts in balance sheet reduction and liquidity management on October 15, 2025, in Beijing.

This announcement signals potential volatility in cryptocurrency markets as liquidity tightens, influencing Bitcoin, Ethereum, and stablecoin activities, with traders closely monitoring future monetary adjustments.

Powell Indicates Possible End to Balance Sheet Reduction

Federal Reserve Chairman Jerome Powell reviewed the Fed's balance sheet role and indicated its reduction might conclude soon. Liquidity conditions are tightening, as highlighted by monitored repo rates. Powell emphasized, "The Federal Reserve's balance sheet has played a pivotal role in stabilizing markets and supporting the recovery. As we move forward, we remain attentive to evolving liquidity conditions and will take appropriate steps as warranted by the economic outlook and risks." — FederalReserve.gov His emphasis on flexibility underscores the Fed's adaptation to economic risks rather than following preset strategies. Markets immediately responded with increased short-term volatility in cryptocurrencies like Bitcoin and Ethereum, as investors reassessed positions. Arthur Hayes, co-founder of BitMEX, commented that the Federal Reserve's potential liquidity tightening would likely preserve market volatility.

Insights from Coincu research suggest Powell's balance sheet remarks may curb crypto liquidity, given historical responses to Federal Reserve decisions. While stablecoin inflow indicates defensive posturing, further regulatory adjustments and repo rate fluctuations will dictate market trajectories.

Insights from Coincu research suggest Powell's balance sheet remarks may curb crypto liquidity, given historical responses to Federal Reserve decisions. While stablecoin inflow indicates defensive posturing, further regulatory adjustments and repo rate fluctuations will dictate market trajectories.

Source: Coinmarketcap

Today marked the first trading day of the week for many North American traders after Columbus Day for the US and the Canadian Thanksgiving — and the session opened with what felt like a long-weekend hangover.Overnight markets had reacted sharply to China’s condemnations regarding the escalating US-China trade tensions, notably hurting Oil markets even further.Despite Trump’s reassuring comments on Sunday, which helped risk assets rebound over the weekend and led to a bullish Monday session, sentiment reversed during the Asia session leading to a scary opening Bell.

Major indices gapped down, with the Nasdaq dropping 1.2% and cryptocurrencies also taking another hit after last week’s selloff.

Sentiment quickly shifted mid-morning after the rough open.

US Trade Representative Jamieson Greer downplayed some of the recent rhetoric between the two nations, triggering a rebound just 20 minutes after the open that carried momentum throughout the session.

By midday, all four major US indices had turned positive, erasing their early losses.

15M Chart Outlook for US Equities – October 14, 2025 – Source: TradingView

Despite the impressive rebound right after the open taking all indices to their weekly highs, there is are ongoing selloff waves in the Dow Jones and the S&P 500 to keep some eyes on. Nasdaq is not really reacting much for now and I am not spotting any headlines.The real bullish catalysts came around mid-day from Fed Chair Jerome Powell, whose dovish remarks at the National Association for Business Economics meeting brought further bullish momentum.

Powell’s comments raised questions about whether the Fed had early insights into the NFP data, as he emphasized that further labor market softening could justify additional easing.His tone cemented expectations for another rate cut by month-end, reinforcing the ongoing theme of things not being so bad after all despite the US-China trade scare.Still, the price action is looking more rangebound with the recent swings rather than back to fully bullish – Let’s take a closer look to the Dow Jones, Nasdaq and S&P 500.

US Equity heatmap – October 14, 2025 – Source: TradingView

US Index analysis and levels: Dow Jones, Nasdaq and S&P 500

Dow Jones 4H Chart

Dow Jones 4H Chart, October 14, 2025 – Source: TradingView

The Dow Jones led an impressive rebound today, lifted by decent earnings and a easier-path ahead when turning to Powell’s latest comments.

A few things to look going forward:

Dow Jones technical levels of interest

Resistance Levels

Support Levels

Nasdaq 4H Chart

Nasdaq 4H Chart, October 14, 2025 – Source: TradingView

The Tech-Heavy index hasn’t rebounded as strongly as its peers today on a relative change and is finding itself in a mixed technical environment.It is the second time that sellers appear at the key Momentum pivot around 24,800 showing how undecisive the price action is.Keep an eye on struggling names in tech like Nvidia: If they come back from here, Nasdaq should follow suit.If the big names keep getting offered, ther path ahead might be a bit more grim.

Nasdaq technical levels of interest

Resistance Levels

Support Levels

Similarly as the Nasdaq, sellers have appeared around the momentum pivot and the overall action might not be as bullish as it was the past few months – Keep an eye on sentiment.A pattern that emerges is the ongoing break-retest action of the main May upward channel – short term technicals are looking more neutral than anything for now.The price action will be interesting for the time to come, expect volatility.

S&P 500 Trading Levels:

Resistance Levels

Support Levels

Source: MarketPulse by OANDA Group

The UK and Canada will join a European Union plan to tap a portion of the almost $300 billion in Russian central-bank assets held by Group of Seven nations, in an effort to ramp up their financial support to Ukraine.

European allies are nearing an agreement to provide loans through a mechanism that would avoid them having to seize the assets outright, according to western officials, who described it as an important step in ensuring Ukraine’s financial security.

The loans would help the country purchase weapons, including from the US, after President Donald Trump’s administration decided to start charging for them. They’d also aim to bolster Ukraine’s wider economy.

UK sanctions have frozen more than £25 billion ($33.3 billion) of Russian assets, according to the latest Foreign Office data from March, while the EU holds around €200 billion ($232 billion). So far, financing sent to Ukraine from immobilized Russian assets has been limited to the profits and interest accrued on them. Most are held via Belgium-based clearing house Euroclear, leading to reluctance from Belgium and others.

Belgium is continuing to push for a concrete underwriting arrangement, in case Russia makes future claims on the assets, providing the main sticking point for talks, according to a person familiar with the matter who asked not to be named discussing private conversations. The EU or a group of member states would provide Euroclear with guarantees to ensure that it can honor any potential Russian claims should these arise through legal challenges.

The EU will aim to reach a political agreement on using the assets at a meeting in Brussels next week, after which it would rapidly start work on a mechanism to release money by the second quarter of next year, Bloomberg has previously reported.

UK Prime Minister Keir Starmer said Britain was prepared to coordinate with the EU on this, following a call with the leaders of France and Germany last week. The three said they want to work with other G-7 nations, including the US, where some of the funds are held.

“We are ready to progress towards using, in a coordinated way, the value of the immobilized Russian sovereign assets to support Ukraine’s armed forces and thus bring Russia to the negotiation table. We aim to do this in close cooperation with the US,” the E3 leaders said in a statement on Friday. “We agree to develop further bold and innovative mechanisms to increase the cost of Russia’s war and ramp up pressure. This includes driving forward action on the Russian shadow fleet.”

G-7 finance ministers will discuss the plan this week as the International Monetary Fund holds its annual meetings in Washington, as well as further joint sanctions between allies that would target the Russian energy sector, companies propping up Russia’s oil trade, and third countries using Russian hydrocarbons, western officials said.

Source: Bloomberg Europe

The Federal Reserve is likely to deliver its second interest rate cut of the year, when it meets later this month, JPMorgan said in a note, after Fed chairman Jerome Powell flagged a softer job market and the economic risk of the Fed moving too slowly to ease monetary policy.

In a speech at an economics conference in Philadelphia on Tuesday, Powell said the labor market had "demonstrated pretty significant downside risks." “Both the supply and demand for labor has declined quite sharply.”

The chairman also hinted at loosening its monetary policy by ending its quantitative tightening, or bond reduction program, amid early signs of tightening in money markets.

Since 2022, the Fed has been trimming the amount of assets it holds on its balance sheet by allowing maturing assets to roll off its balance sheet. QT has been the Fed’s balance sheet shrink from nearly $9 trillion seen at the height of pandemic to the current figure of about $6.59 trillion.

The Fed has said it plans to stop balance sheet runoff when reserves "are somewhat above the level consistent with ample reserves conditions," Powell said, adding that this point is approaching.

"We may approach that point in coming months and we are closely monitoring a wide range of indicators to inform this decision," Powell said.

Powell’s latest comments “solidified expectations for further rate cuts, starting at its next meeting Oct. 28-29," JPMorgan said in Tuesday note.

“While there was little doubt the Fed was angled to cut rates at its next meeting, today’s remarks were strong confirmation of that expectation,” it added.

A rate cut at Oct. 28-29 meeting is now all but priced in, according to Investing.com’s Fed Rate Monitor Tool.

Source: Investing

Source: Reuters