The flash crash of October 11th remains a nightmare for many traders.
In just a few minutes, the prices of hundreds of tokens plummeted to near zero, only to rebound thousands of times.
PANews reviewed data from 430 Binance spot trading pairs and found that:
The average maximum drop across all tokens that day was 66%, with seven tokens falling over 99% and 32 over 90%.
Although the average subsequent rebound was as high as 5,500%, after eliminating the false "low-point rebound," actual prices have only recovered to approximately 83% of their pre-crash levels, indicating that despite the strong rebound, the market has yet to fully recover. Looking at the sector distribution:
MEME tokens were the hardest hit, with an average drop of 78%, making them the sector with the weakest rebound;
DeFi and AI tokens performed relatively well, with their prices only 14% below their pre-crash levels after the rebound;
Layer 1 and Layer 2 public chains both saw declines exceeding 60%, no longer demonstrating their safe-haven properties.
This decline was almost an event of "indiscriminate liquidation."
Further analysis of the correlation between transaction volume and trading volume revealed that higher trading volume and better liquidity led to smaller declines.
Tokens with a drop of 20%-30% had an average daily trading volume of approximately $239 million; while tokens with a drop of over 90% had a trading volume of only $6 million, a nearly 100-fold difference.
This data clearly indicates that liquidity depletion is the core driver of the market instability.
From a derivatives perspective, between October 8th and 19th, total open interest plummeted from $233.5 billion to $146.6 billion, significantly reducing leverage. Open interest in major altcoins like DOGE and XRP fell by over 65%.
Although the fear index fell below 40, stablecoin issuance reached a new high of $307.6 billion, indicating that capital hasn't completely fled.
The conclusion is clear: the October 11th flash crash was a "systemic stampede" triggered by a combination of high leverage and low liquidity.
The good news is that excessive leverage has been forcibly liquidated. The bad news is that the market will take time to recover.
The true lesson is this: always invest in the most liquid assets.
