Crypto Flash Crash exposes Unhedged Over Leveraged Longs

Global Intel Hub — 10/12/2025 — This weekend saw massive volatility in BTC and Crypto in general, stopping out to the moon longs, mostly young people who have no experience or education in trading. The very basics in any trading course will tell you to hedge big positions, be careful with leverage (should be used only in specific scenarios) and always use a stop loss. Apparently these traders didn’t know about any of that, and expected that Crypto would simply go straight up and never down, although BTC went down 90% 10 + times since inception. Our hearts go out to those who lost money, but it can’t be stressed enough that trading *any* asset should be done using capital you can afford to lose 100%, to always use stop losses and hedge (even if that means splitting your capital up between trading money and real investment money). Trading any asset is risky but Crypto is super volatile and a pure OTC market, there’s no regulator, there’s no bailouts, there’s just electronic data moving left and right. It’s a virtual game, not a market. The CME offers risky derivatives but they are backed by real markets, i.e. Corn, Gold, Stocks, etc.

VCC – Trading vs. Investing a look at the Crypto Flash Crash vs. Venture Investing

As stated, we are biased Venture investors, however, as former traders we feel the pain and this is exactly why we moved from FX trading to long term value investing.

For those looking to dive into VC Investing, we have a Book and Course @ UnreadPage.com/LearnVC

Summary of the Carnage

This summary is powered by Maximus AI – by Macro Tech Titan

Since Friday, both the crypto and stock markets experienced heightened volatility and major shifts driven by global risk events and policy signals. Stocks endured a steep sell-off at week’s end as President Trump announced plans for potentially severe new tariffs on Chinese imports, triggering concerns around rare earth supply chains and a government shutdown approaching key payroll deadlines. On Friday, the S&P 500 dropped 2.4%, its largest single-day slide since April, while the Dow Jones fell 2.7% and the Nasdaq lost 2.5%, collectively erasing nearly $2 trillion in market value. However, by Sunday and Monday, investor sentiment improved after President Trump struck a softer public tone, hinting that further negotiations with China were imminent. This fueled a rebound in futures: S&P 500 up 1.3%, Nasdaq 100 up 1.9%, and Dow Jones climbing more than 400 points, accompanied by a broad rally in major tech stocks including Nvidia, Apple, and Tesla.cnbc+4

Crypto markets were even more turbulent. On Friday, a historic liquidity crunch unfolded, leading to nearly $19 billion in forced liquidations and a wipeout of over $380 billion in market value within hours. Bitcoin plummeted from highs near $126,000 early last week to briefly below $105,000 Friday, but rebounded to around $115,683 by Monday morning. Ethereum saw a sharp decline below $3,500 before surging back to $4,157, marking a rebound of nearly 12% within 48 hours. Major altcoins such as DOGE and XRP also swung double digits during the sell-off, then rallied over the weekend. The overall crypto market cap stands at approximately $3.81 trillion, up about 0.09% for the week despite the massive intra-period volatility. News of ongoing US-China trade negotiations and the kickoff of Q3 earnings for major banks were seen as potential supports for both asset classes going forward.tradingeconomics+6

Numbers Summary

Stock Indices:

S&P 500: -2.4% Friday; recovered +1.3% in futures Mondayedwardjones+2
Nasdaq: -2.5% Friday; +1.9% in futures Mondayedwardjones+1
Dow Jones: -2.7% Friday; +400 points in futures Mondaytradingeconomics+1
Weekly Market Cap Loss: ≈ $2 trillioncnbc

Major Stocks (Monday am):

Nvidia: +3.5%
Microsoft: +1.5%
Apple: +1.7%
Amazon: +2.0%
Meta: +1.6%
Broadcom: +3.4%
Tesla: +2.8%tradingeconomics

Crypto Market:

Crypto market cap: $3.81 trillion (+0.09% week)coinbase
Bitcoin: fell below $105,000 Friday, rebounded to $115,683 (+2.2% daily); previous high $126,000financemagnates+2
Ethereum: dropped below $3,500, rebounded to $4,157 (+11.7% daily)investors+1
Record Liquidations: $19 billion, 1.6 million traders affectedglobaltrademag+1
Top altcoins: DOGE +10%, XRP +7.4% after sell-offfinance.yahoo+1

Drivers:

Trump tariff threats, China rare earth restrictions, government shutdown risk, record crypto liquidations, Q3 earnings season, improved US-China negotiation tonepintu+3

Both markets remain highly reactive to geopolitical developments and institutional risk signals, with sentiment shifting quickly in response to official communications and technical events.pintu+2

For those looking to dive into VC Investing, we have a Book and Course @ UnreadPage.com/LearnVC

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VCC – Trading vs. Investing a look at the Crypto Flash Crash vs. Venture Investing

For those looking to dive into VC Investing, we have a Book and Course @ UnreadPage.com/LearnVC

Summary of the Carnage

Numbers Summary

For those looking to dive into VC Investing, we have a Book and Course @ UnreadPage.com/LearnVC

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