Crypto Markets Face $20B Shock as Drift Protocol Holds Strong

Crypto markets lost $20B after Trump’s tariff news but Drift Protocol stayed solid, handling $76M in liquidations safely.

Drift’s $50M insurance fund protected users as prices plunged from 223 to 173 in one of crypto’s worst trading days.

Solana and Drift ran smoothly with 3,200+ TPS, proving strong systems can survive even the toughest market crashes.

Crypto markets experienced a severe $20 billion wipeout on October 12, 2025, following Donald Trump’s sudden tariff announcement. The unexpected decision triggered one of the most dramatic one-day declines in digital asset history, shaking investor confidence across exchanges

Within hours, major cryptocurrencies faced intense selling pressure as traders reacted to the policy shock. According to analyst Cindy, Drift Protocol’s systems faced extreme stress but performed without failure, underscoring its strong risk framework during the market turmoil.

Sharp Drop and Price Reaction

The analyzed chart displayed by Cindy showed steep volatility across a 36-hour window. The asset opened near 223 and quickly fell to 205, marking an aggressive early sell-off. As the markets moved into the following session, there was still a lot of selling activity, which caused the asset to continue losing money.

A temporary floor was eventually formed by prices stabilizing between 185 and 190 before another selling cycle began. As a result, the market fell 49.57 points from the start of the session to bottom out at 173.

Source: Daan Crypto Trades

Volume data confirmed considerable trader engagement during panic-driven liquidations, with the precipitous decrease between 18:00 and 06:00 showing the strongest activity. Additionally, the volume of trading reached 7.159 million units, indicating high levels of activity on all exchanges

Buyers cautiously entered the market as the price got close to 173, which led to a slight recovery near 180. The comeback, however, halted close to 183, suggesting strong resistance and poor momentum for follow-through.

Drift’s Risk Engine Proves Resilient

Cindy explained that despite extreme volatility, Drift Protocol successfully handled over $76 million in liquidations without user losses. “Drift does not have an ADL (auto-deleveraging system)—it has a risk waterfalling system,” she said. The protocol’s $50 million insurance fund supported over $500 million in open interest, ensuring all positions were fully covered. Additionally, Solana’s blockchain maintained full uptime, processing over 3,200 TPS during peak stress.

Therefore, the platform's balanced liquidation mechanism and strong infrastructure stopped significant contagion throughout its ecosystem. Additionally, all shocks were absorbed by the vAMM reserves and charge pools, demonstrating Drift's capacity to shield consumers during periods of unheard-of volatility.

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