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Friday’s session saw one of the sharpest resets in months. Median perpetual drawdowns reached −66%, with total liquidations exceeding $6.7 billion on Hyperliquid alone. Despite the scale of the move, assets have since rebounded strongly, recovering a median +129% from crash lows while remaining −17.5% below pre-crash levels.

All major indices were hit hard on Friday. Between Oct. 10 at 12 pm ET and Oct. 11 at 12 pm ET, the S&P 500 fell from −0.29% on the week to −2.7%, and the Nasdaq 100 from +0.5% to −2.7%. Crypto sold off most sharply, with BTC dropping from −1.6% to −10.6% weekly. Gold, however, held its safety bid at roughly +2% on the week (+2% pre-crash, +1.9% post-crash), significantly outperforming both equities and BTC.

The sharp moves followed Trump’s announcement of a 100% tariff on Chinese imports in response to China’s expanded rare earth export controls. Traders were caught off guard: Polymarket odds had priced 25-40% tariffs as the base case (70% probability) and 100-150% tariffs at just 3.5%. Immediately after the headline, odds for 100-150% tariffs surged to 28.4%, briefly becoming the most likely outcome.

Tape analysis clearly points to Trump’s announcement as Friday’s catalyst. Selling pressure had already been building near $120K BTC, with large directional shorts positioned before the news. Price action accelerated sharply at 4:53 pm ET, triggering a liquidation cascade following the headline. Intraday lows printed near $101K on Binance and Hyperliquid (−16.53%) and around $107K on Coinbase and Binance Spot.

Polymarket odds then reverted, restoring the 25-40% bucket as the most likely outcome. BTC subsequently rebounded to around $115.4K, settling roughly −4.5% from pre-crash levels, indicating minimal lasting impact despite the initial violent reaction. It’s worth noting that despite this market relief and softening tones, tariffs are still scheduled to take effect on Nov. 1.

Nevertheless, Friday marked one of the worst liquidation events and altcoin drawdowns in recent memory, with median perpetual drawdowns reaching −66.8% on Hyperliquid. 

Hyperliquid also activated auto-deleveraging (ADL), a last-resort mechanism that closes profitable shorts to prevent bad debt when insurance funds are insufficient, partially capping some winning positions during the cascade. On Hyperliquid alone, liquidations totaled $6.70 billion from 4:45 pm ET onward ($4.35 billion backstop + $2.35 billion market).

Crypto indices mirrored this weakness, recording a median maximum drawdown of −24%. The hardest-hit sectors included Modular (−36%), Gaming (−27%), and Launchpads (−27%). Despite the rebound, crypto indices remain down an average of −9% from pre-crash levels.

Leading the bounce off lows were L2s (+36.96%), AI (+34.81%), and Modular (+21.51%), while L1s (+1.44%), AI (+1.09%), and L2s (+0.70%) emerged as the best relative performers compared to pre-crash levels.

— Shaunda Devens

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Katana was built by answering a core question: What if a chain contributed revenue back into the ecosystem to drive growth and yield?

We direct revenue back to DeFi participants for consistently higher yields.

Katana is pioneering concepts like Productive TVL (the portion of assets are actually doing work), Chain Owned Liquidity (permanent liquidity owned by Katana to maintain stability), and VaultBridge (putting bridged assets to work generating extra yield for active participants).

On Friday’s livestream, we covered:

• MetaDAO's fundraising and governance: We discussed Umbra's ICO raising $150 million (capped at $3 million), highlighting how MetaDAO’s platform allows strategic investor decisions and clawbacks. We critiqued a controversial OTC proposal by DBA Invariant to buy tokens at a significant discount amid price volatility, showcasing governance complexity in DeFi.

• Monad Network launch anticipation: We examined Monad's anticipated token launch and discussed strategies for gaining sustainable attention and momentum post-launch. A notable challenge speaks to maintaining user engagement beyond initial incentives, in reference to lessons from Plasma and Solana.

• DoubleZero tokenomics and market reaction: We analyzed DoubleZero's launch, which faced scrutiny for initial token valuation, especially compared to Jito's more established market presence. We discussed potential revenue streams and challenges related to dual-token equity structures, drawing on insights from recent conversations with validators.

• Growth strategies across chains: We explored how effective marketing, community engagement and continual innovation differentiate successful chains. We highlighted the necessity of consistent, momentum-driving activities rather than a sole reliance on token incentives or founder-driven hype.

• Eastern vs. Western app strategies: We contrasted the comprehensive "everything app" approach prevalent in Eastern markets (like Binance's integrated trading ecosystem) with the Western preference for minimalist, single-purpose apps. We unpacked the ways these strategies influence user adoption and market competitiveness in crypto.

• DeFi landscape and strategic positioning: We evaluated Aave's market dominance in lending compared to emerging competitors like Morpho and Euler. We discussed Coinbase’s increasing role in positioning certain protocols like Morpho, highlighting potential long-term impacts.

Watch the full livestream on YouTube, Spotify, Apple Podcasts, and X.

This summary was generated with assistance from AI tooling.

Not at DAS: London? Not a problem.

Tune into the DAS livestream, presented by Solana Company (HSDT) backed by Pantera Capital, to catch all the alpha, debates, and announcements.

Be sure to follow live updates on X too! @blockworksDAS

Charts of the week

As mentioned in the indices section, the crash resulted in a major loss of open interest and positions. Global open interest fell from $91 billion to $57 billion. Excluding BTC, altcoin open interest nearly halved, dropping from $37 billion to $19 billion.

On Binance, the median max drawdown across assets was −64%, with major tokens such as SUI and TIA seeing declines of over 80%. The correlated move was a result of market liquidity stress, leading to synchronized liquidations across assets. Only 86 assets (13%) limited their losses to under 20%, with TRX among the strongest performers.

Despite the severity of the drop, altcoins have shown strong recoveries, similar to BTC. On average, assets have rebounded 85% from their crash lows, with 56 assets (8.5%) already surpassing pre-crash levels. However, the majority of assets, 457 (69%), remain below 90% of their pre-crash values, indicating continued market caution.

Among the strongest recoveries, ZEREBRO stands out, now trading at 272.9% of its pre-crash value. BAS has also ripped back, keeping the BNB season narrative very much alive. Strangely, SNX is up 189.9%, after Degenping (who ominously predicted a 10/10 bid) started bullposting the token. Such rebounds, especially after a market-wide correction, are healthy indicators that weak positions (over-margined or short-term) have been flushed out and new buyers have stepped in, ready to take on risk, and could expect to lead the market.

Overall, most assets have recovered, with only 36 trading below 70% of their pre-crash levels. Interestingly, XPL ranks among the 10 worst performers following the drop, trading at 42% of its pre-crash value vs. a median of 85%. This likely comes from its heavy incentive emissions to support USDT liquidity, with the longer-term neobank narrative forcing short-term holders who used XPL as a USDT proxy to puke positions.

Nonetheless, the broader market has shown strong resilience: The median recovery from crash lows stands at +129%, while the median position relative to pre-crash levels is −17.5%. For those under-allocated, now might be a good time to pick up discounted tokens that reacted to a tariff threat that has now seemingly been walked back. For those struggling, it’s a good moment to reassess positioning and rotate back into winners.

— Shaunda Devens

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates. This fragmentation reflects fundamental trade-offs between trust assumptions, execution speed, and capital efficiency that each protocol addresses through distinct architectural choices.