Binance pins crypto's worst-ever liquidation day on macro risks, not exchange failure
Analysis
Price Impact
HighBinance's report details a 'worst-ever liquidation day' involving over $100 billion in bitcoin derivatives open interest and $150 billion in systemic liquidations across global markets. this indicates a severe and widespread market event, impacting major cryptocurrencies significantly.
Trustworthiness
HighThe report comes directly from binance, a major exchange, providing a detailed explanation, acknowledging specific platform issues, and confirming over $328 million in user compensation. this level of transparency and detail lends high credibility to the explanation of the events.
Price Direction
NeutralWhile the news explains a past 'flash crash' (bearish event), the current report clarifies that the primary causes were macro risks, high leverage, and thin liquidity, not a core exchange failure. binance also states it has resolved the minor platform-specific issues and compensated users. this clarity, along with the resolution of internal issues, might alleviate some fud (fear, uncertainty, and doubt) regarding exchange integrity, leading to a neutral to slightly positive market sentiment rather than a specific price direction for future trades.
Time Effect
LongThe report serves as a long-term reminder for market participants about the inherent risks of excessive leverage, thin liquidity, and macro-economic factors in crypto markets. while immediate fud might dissipate, the lessons learned and improved risk management practices by exchanges and traders will have a lasting effect.
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Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Binance pins crypto's worst-ever liquidation day on macro risks, not exchange failure Binance says October 10’s crypto flash crash was driven by a macro risk-off shock, cascading liquidations and thin liquidity, while acknowledging two platform-specific issues that occurred after most losses had already hit. By Shaurya Malwa Jan 31, 2026, 8:50 a.m. Make us preferred on Google What to know : Binance attributed the Oct. 10 flash crash to a macro-driven selloff colliding with heavy leverage and vanishing liquidity, rejecting claims of a core trading-system failure. The exchange said more than $100 billion in bitcoin derivatives open interest and rapidly thinning order books fueled cascading liquidations, while blockchain congestion and spiking Ethereum gas fees worsened fragmentation across venues. Binance acknowledged two platform-specific issues, compensated users with over $328 million, and said about 75 percent of liquidations occurred before its index deviations, underscoring the broader market shock as the main cause. Binance blamed the October 10 flash crash on a macro shock colliding with heavy leverage and evaporating liquidity, rather than any breakdown in its trading systems following speculative chatter on social media. In a report released Saturday, the exchange said global markets were already under pressure following trade-war headlines when crypto markets cracked. Bitcoin and ether had rallied for months into early October, leaving traders heavily positioned and exposed. STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy . 10/10’s myths and facts explained. 👉 https://t.co/SpE6scqpSx pic.twitter.com/OJhZESWlP4 — Binance (@binance) January 30, 2026 At the time, open interest across bitcoin futures and options exceeded $100 billion, creating conditions ripe for forced deleveraging once prices started to fall, it said. The selloff quickly fed on itself. As prices slid, market makers activated automated risk controls and reduced exposure, pulling liquidity from order books. Data cited by Binance, sourced from Kaiko, showed bid-side depth nearly vanished on several major exchanges during the peak of the move. With fewer resting orders, even small liquidations pushed prices sharply lower. The disruption was not limited to crypto. U.S. equity markets lost an estimated $1.5 trillion that day, with the S&P 500 and Nasdaq posting their largest one-day drops in six months. Binance said roughly $150 billion in systemic liquidations occurred across global markets. Blockchain congestion added to the strain. Ethereum gas fees spiked above 100 gwei at times, slowing transfers and limiting arbitrage between venues. With capital unable to move quickly, price gaps widened and liquidity fragmented further. Binance incidents that occured Binance acknowledged two platform-specific incidents during the crash but said neither caused the broader market move. The first involved a slowdown in its internal asset-transfer system between 21:18 and 21:51 UTC, affecting transfers between spot, earn and futures accounts. Core trading systems remained operational, but some users temporarily saw zero balances displayed due to backend timeouts. Binance said the issue stemmed from a database performance regression under surge traffic and has since been fixed. Affected users were compensated. The second incident involved temporary index deviations for USDe, WBETH and BNSOL between 21:36 and 22:15 UTC, after most liquidations had already occurred. Binance said thin liquidity and delayed cross-venue rebalancing caused local price moves to disproportionately affect index calculations. Methodology changes have since been implemented, and impacted users were compensated. Binance said about 75% of the day’s liquidations occurred before the index deviations, pointing to the initial macro shock as the primary driver. In total, the exchange said it compensated users with more than $328 million and launched additional support programs to stabilize participants affected by the crash.