The Oct. 10 flash crash erased more than $19 billion in leveraged positions and triggered severe stablecoin dislocations; Ethena’s USDe briefly fell to $0.65 while Ripple USD (RLUSD) held its $1 peg and rose into the top 100 by market cap, highlighting resilience in some issuer-backed stablecoins.
-
Largest liquidation event: over $19 billion in leveraged bets liquidated on Oct. 10
-
Ethena’s USDe briefly depegged to $0.65 on Binance amid heavy selling; Ripple USD (RLUSD) maintained its $1 peg
-
RLUSD reached the 82nd position by market cap at $840.86 million, surpassing CRV; funding rates hit lows not seen since 2022
Oct. 10 flash crash: Over $19B liquidated, USDe dipped to $0.65 while Ripple USD held $1 — read the analysis and next steps for traders. Stay informed with COINOTAG.
By COINOTAG — Published: 2025-10-11. Updated: 2025-10-15
What caused the Oct. 10 flash crash and how did stablecoins respond?
The Oct. 10 flash crash was driven by a rapid, deep sell-off that collided with concentrated leverage and thin liquidity in derivatives and spot order books, producing the single-largest liquidation event in crypto history: more than $19 billion in forced liquidations. Several “stable” assets experienced temporary depegs, though issuer-backed coins with deep liquidity, like Ripple USD (RLUSD), preserved their $1 peg.
Why did Ethena’s USDe lose its $1 peg to $0.65 on Binance?
The USDe depeg reflected a classic liquidity and routing failure under extreme stress. Aggressive market sell orders crossed thin order books on Binance, pushing the exchange-specific price far below the broader market. On-chain analytics firms and exchange data show that funding rates plunged and several large leveraged long positions were forcibly closed, amplifying the sell pressure. Analysts at CoinGlass noted that concentrated order book depth and automated liquidation engines can produce exchange-specific anomalies during sudden volatility. “When liquidity evaporates, even algorithmic and synthetic dollars can diverge sharply from their targets,” analysts observed.
The event illustrates three structural vulnerabilities: concentrated liquidity on specific venues, reliance on synthetic or algorithmic mechanisms for peg maintenance, and the cascading effect of margin liquidations. Official exchange data and on-chain metrics recorded extreme funding rate movements and a large spike in trade volume and slippage during the window of disruption.
RLUSD’s performance and market cap movement
Ripple USD (RLUSD) successfully maintained its $1 peg throughout the sell-off, a noteworthy stress test given the scale of the market dislocation. At press time, RLUSD sat at the 82nd largest position by market capitalization, valued at approximately $840.86 million, overtaking DeFi token Curve Dao (CRV). The token’s relative stability during the crash appears linked to issuer-backed liquidity provisions and growing institutional adoption efforts by Ripple.
Ripple’s recent strategic partnership with Bahrain’s FinTech Bay—announced to promote custody services and RLUSD adoption among regional financial institutions—likely contributed to increased demand and institutional trust. Market observers referencing CoinMarketCap-style rankings and on-chain supply metrics noted RLUSD’s ascent into the top 100 was brief initially but has shown renewed momentum amid adoption headlines.
Frequently Asked Questions
How common are stablecoin depegs during severe market sell-offs?
Stablecoin depegs are uncommon but not unprecedented in extreme volatility. During rapid sell-offs, exchange-specific order book gaps and liquidation cascades can push prices away from $1; examples include prior events in 2020–2022 and the Oct. 10 incident where USDe fell to $0.65 briefly on one venue. Issuer-backed stablecoins with deep reserves tend to repeg faster.
Did RLUSD’s maintenance of the peg indicate superior design?
RLUSD’s peg resilience during Oct. 10 suggests robustness in liquidity provisioning and issuer support, but no single event proves long-term superiority. The outcome reflects a combination of market depth, reserve management, and active liquidity measures by the issuer. Ongoing monitoring of reserves and redemption mechanics is recommended.
Key Takeaways
- Largest-ever liquidation event: The Oct. 10 crash liquidated over $19 billion—an unprecedented scale that stressed derivatives and spot markets.
- Stablecoin behaviour varies: Ethena’s USDe experienced a severe, exchange-specific depeg to $0.65, while RLUSD preserved its $1 peg, underscoring different resilience models.
- Adoption and liquidity matter: RLUSD’s market-cap rise to $840.86M and institutional outreach (e.g., Bahrain FinTech Bay partnership) likely supported stability; traders should prioritize liquidity and issuer transparency.
Conclusion
The Oct. 10 flash crash was a historic liquidity event that exposed vulnerabilities in leveraged markets and synthetic stablecoin mechanisms while simultaneously testing issuer-backed alternatives. Oct. 10 flash crash outcomes reinforce the importance of deep, diversified liquidity and transparent reserve management. Moving forward, market participants and institutions should scrutinize stablecoin architecture, exchange liquidity, and liquidation mechanics to reduce systemic tail risk. For continued updates and data-driven coverage, follow COINOTAG’s reporting and official market metrics from exchanges and on-chain analytics providers.
Sources (plain text): on-chain analytics firm CoinGlass; exchange trading data from Binance; market capitalization and rankings data as reported by CoinMarketCap-style aggregators; official announcements from Ripple and FinTech Bay.
