When every number in your portfolio is green, almost any coin can look brilliant. But when the floor collapses, only a few assets keep their footing long enough for investors to see the difference between story and substance, and that’s exactly what the Oct. 10 crypto flash crash did.
A tariff headline turned into the fastest crypto market catastrophe on record, and, as always, the market’s weak spots were what snapped first. Meanwhile, Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Solana (CRYPTO: SOL) dipped but largely held strong. Here’s why that’s a new reason to buy them.
This stress test clarified the pecking order
On Oct. 10, new tariff rhetoric triggered a cascade that sent Bitcoin down roughly 12% at the lowest point, with Ethereum and Solana dropping by 15% to 30% and altcoins faring far worse, with drawdowns in excess of 70% in many cases. The move was the largest notional crypto deleveraging event ever, with more than $19 billion in leveraged positions wiped in about 24 hours.
Whereas many altcoins were shown to be nearly worthless under stress, particularly when market makers temporarily stopped supporting their liquidity, Bitcoin’s relative strength and quick stabilization afterward reflected a familiar pattern. When confidence is low, capital crowds into the asset with the strongest claim on durability, which, in this case, was Bitcoin. While its performance stopped short of being a genuine safe harbor during the flash crash, as it’s still beneath its prior highs, it’s undeniable that investors identified it as an asset with value in a time of turmoil.
Ethereum’s decentralized finance (DeFi) ecosystem, meanwhile, acted like a shock absorber for the chain. Its on-chain decentralized exchanges (DEXs) absorbed massive position unwinds, while weekly DEX volume set a new record near $177 billion as risk transferred efficiently between counterparties.
To put it another way, Ethereum’s DeFi platform demonstrated value, despite the potential for significant losses within its DeFi sector. Moreover, the main Ethereum chain didn’t go down during the crash because it was overloaded, although at least one of its Layer-2 (L2) chains did. However, this isn’t a reflection on Ethereum, but rather on the L2s’ individual throughput capabilities, as they function independently.
