Last Friday, the US announcement of 100% tariffs on all Chinese imports starting November 1 sparked a flight to safety across all major markets. The S&P 500 dropped 2.9%, the VIX spiked from 16 to 22, and 10-year yields fell from 4.14% to 4.05% as investors derisked and rotated defensively, with gold pushing higher. Digital assets were hit just as hard, entering the event with $220 billion in total open interest. Within hours, crypto saw $19 billion in leveraged positions liquidated, marking the largest single-day wipeout on record.

Below are Wintermute’s observations across spots, perps, and options.

Spot market

Based on aggregated centralized exchange data, we saw that the spot sell-off was fast and synchronized, with most centralized exchange pairs hitting their lows within a 55-minute window (20:40-21:35 UTC). Violent price movement quickly led to liquidity disappearing from the broader market. As prices post the drawdown recovered, liquidity came back rapidly. 

Based on aggregated exchange data across the top 50 largest tokens, we saw:

• The median drawdown reached -54%, with over 90% of tokens dropping more than 10%. BTC (-11%) and ETH (-13%) proved most resilient, while mid- and small-cap assets fell 60-80% at the peak. 

• Nearly all tokens bottomed around 21:20 UTC during the global liquidation wave, then snapped back sharply, rebounding an average of +84% within 30 minutes as forced selling unwound.
• Losses were inversely linked to size: large caps fell about -27% on average versus -52% for the smaller (based on GMCI 30). Within an hour, order-book conditions normalized and flows rotated back into BTC, ETH, and the major Layer-1s, while smaller names lagged.

• Aggregate CEX bid-ask depth dropped roughly 65% at the trough but recovered to >90% of pre-event levels within 35 minutes, as quoting frequency and spreads normalized. Over this period, liquidity was provided, albeit at wider levels vs mid-prices.

Options

BTC options positioning turned sharply defensive on Friday as traders rushed for downside protection following the U.S. tariff shock, sending aggregate options volumes to an all-time high.

The move captures activity over the 24 hours surrounding the tariff headlines and market sell-off, when panic hedging dominated flows and short-dated puts were bid aggressively. By Saturday, sentiment shifted, traders moved into vol harvesting and range plays, selling upside calls and running short calendars as BTC stabilized around $115k.

• Volatility surged as traders scrambled for protection, with 7–14d IV jumping 20–25 points and puts trading 10–15 vols above calls around 105–115k strikes, marking one of the largest single-day front-end spikes on record.
• Options volume hit a record, concentrated in Oct expiries, with ~70% of total premium flowing into puts below $115k, highlighting the depth of downside demand. Deribit almost doubled its 24-hour trading volume record.
• By Saturday, flows flipped to vol selling, with traders shorting calls and straddles near 118–130k, compressing 1w IV from 63 → 51 as the market quickly treated the tariff shock as temporary rather than lasting.

Perp Futures

Both centralized and decentralized perp markets were tested to their limits during Friday’s crash, as billions in leveraged positions were wiped out within minutes. Centralized exchanges saw record liquidations and brief liquidity gaps, while on-chain DEX perps faced heavy strain on their liquidation systems and vaults. Yet most leading DEX platforms stayed fully operational and solvent throughout. The event was a real-world stress test for the resilience of on-chain trading and margin systems.

As some users were running long–short spread strategies, they were ADLed on the short leg, leaving them temporarily non-neutral and subsequently exposed to liquidation on their long positions as prices continued to fall. In total, more than 1,000 wallets on Hyperliquid were automatically deleveraged, potentially contributing to parts of the liquidation cascade during the event.

On HYPE specifically, which saw the most liquidation across venues ($10.3b):

• The unwind triggered one of the first cross-margin Auto-Deleveraging (ADL) events on a major DEX perps platform, a last-resort mechanism that closes part of profitable positions when backstop vaults run out. 
• Gas usage spiked to ATH (10.5K), roughly 3× higher than any day since March and 2× above the previous all-time high, reflecting the surge in on-chain liquidations and trading activity during the event (as shown on our Dune dashboard).

On centralized exchanges

• Open interest got hit hard as the majority of contracts lost around half their size during the drop, showing a full leverage flush across the board.
• Funding turned sharply negative, a mechanical move driven by liquidations rather than positioning. It only partly recovered over the weekend and remains below average levels for most of the top 100 tokens.

All of this is a reminder that in crypto markets, it is critical to manage risk and leverage and to expect the unexpected. Wintermute continues to provide liquidity across venues, with our OTC desk active 24/7 and trading with counterparties globally. If you are reassessing exposure or looking to execute, please contact the desk.