Tether and Circle Mint $1.75 Billion in Stablecoins to Combat Crypto Crash of October 2023

On October 10, 2023, the crypto market was hit by a brutal sell-off, sparked by renewed trade tensions between the U.S. and China. In a swift response, stablecoin giants Tether and Circle minted a staggering $1.75 billion in new USDT and USDC tokens to inject liquidity and prevent a deeper spiral. Meanwhile, big players like Bitmine seized the moment, snapping up $104.24 million worth of Ethereum (ETH) at fire-sale prices. It’s the kind of chaos that turns social media into a warzone of despairing memes and smug “I told you so” hot takes—but also a moment to see how far this space has come.

• Market Crash Cause: U.S.-China trade tensions on October 10 triggered a sharp crypto sell-off.
• Liquidity Lifeline: Tether and Circle minted $1.75 billion in USDT and USDC to stabilize markets.
• Opportunistic Buy: Bitmine purchased 27,256 ETH, valued at $104.24 million, during the dip.
• DeFi Strength: Protocols like Aave and Uniswap handled record volumes with minimal issues.
• Recovery Risks: Escalating tensions or stablecoin liquidity concerns could stall a rebound.

What Sparked the October 10 Crypto Crash?

The crypto market has never been a stranger to volatility, and October 10, 2023, proved no exception. Renewed trade tensions between Washington and Beijing—specifically fears over new tariffs—sent shockwaves through global markets. Tariffs mean higher costs for goods, spooking investors across traditional and digital assets alike. When panic hits, volatile sectors like crypto often feel the brunt first. Bitcoin, Ethereum, and a slew of altcoins saw double-digit losses in hours, as over-leveraged traders—those borrowing heavily to bet on price movements—were forced to sell at a loss when prices tanked. This cascade of forced sales, known as leveraged liquidations, drained liquidity and amplified the downturn. Unlike past disasters driven by broken projects or scams, this was a reaction to external macro pressures, not internal rot.

Stablecoins to the Rescue: A $1.75 Billion Lifeline

In the face of this market mayhem, Tether and Circle stepped up as first responders. For those new to the space, stablecoins are cryptocurrencies pegged to a stable asset, typically the U.S. dollar, meant to act as a safe harbor amid crypto’s storms. USDT (Tether) and USDC (Circle) are the titans of this category, serving as critical liquidity tools for traders and exchanges. Following the crash, these two powerhouses minted a combined $1.75 billion in new tokens—a move tracked by on-chain analytics platform Lookonchain. This wasn’t just a symbolic gesture; it was a calculated flood of liquidity into exchanges and trading pairs, designed to settle panicked positions and curb further price drops.

But how does this minting work? When demand for stablecoins spikes—often during crashes as traders seek safety or need cash to cover losses—exchanges request new tokens from issuers like Tether and Circle. These tokens are created, ideally backed by reserves of real dollars or equivalent assets, and injected into the market. Historically, similar moves have helped stabilize crypto during crises, like the 2020 “Black Thursday” crash. Yet, this scale of issuance—$1.75 billion in a matter of days—raises eyebrows. While it’s a sign of a maturing ecosystem with rapid response mechanisms, it also begs questions about transparency. Tether, in particular, has long faced scrutiny over whether its reserves fully back USDT, and USDC’s centralized nature ties it closely to traditional finance. As advocates for decentralization, we must ask: are we solving volatility only to trade one form of trust for another?

Whales Dive In: Bitmine’s Bold Ethereum Bet

While stablecoins provided a safety net, not everyone was in damage control mode. Bitmine, a heavyweight crypto investor—often called a “whale” for their ability to sway markets with massive capital—saw a golden chance. During the peak of the panic, they acquired 27,256 ETH, worth approximately $104.24 million. Ethereum, the second-largest cryptocurrency and the foundation of decentralized finance (DeFi), often attracts big players during dips due to its utility in smart contracts and dApps. Bitmine’s move isn’t just a gamble; it’s a loud statement of confidence in ETH’s long-term value, especially as its price slumped alongside the broader market.

Why Ethereum over Bitcoin or other assets? While Bitcoin remains the ultimate store of value for many (and a personal favorite for us Bitcoin maximalists), Ethereum’s role as the backbone of innovation in DeFi and NFTs makes it a unique bet. Whales like Bitmine often target ETH during downturns, anticipating rebounds driven by developer activity and institutional interest. Still, it’s not without risk—Ethereum’s high gas fees and ongoing scalability challenges could dampen recovery if adoption stalls. Bitmine’s history of strategic buys during dips suggests they’re playing the long game, but only time will tell if this $104 million wager pays off.

DeFi’s Stress Test: A Surprising Success

Amid the chaos, decentralized finance (DeFi) emerged as an unexpected hero. For the unversed, DeFi refers to blockchain-based financial tools—think lending, borrowing, and trading—operating without banks or middlemen, primarily on networks like Ethereum. During the October crash, protocols like Aave (a lending platform) and Uniswap (a decentralized exchange) reported record transaction volumes while experiencing minimal downtime. That’s huge. In past meltdowns, like the 2020 Black Thursday event, DeFi systems often crumbled under stress—smart contracts failed, networks clogged, and users were left stranded. This time? They didn’t just survive. They thrived.

Take Aave, for instance. Its total value locked (TVL)—the amount of crypto collateral staked in the protocol—barely flinched, even as markets bled. Uniswap, meanwhile, facilitated billions in trades as users swapped tokens to adjust positions. This resilience signals a maturing infrastructure, a far cry from the brittle early days of DeFi. But let’s not get carried away. Risks like flash loan attacks—where bad actors exploit code vulnerabilities for quick profit—or untested smart contracts still loom. DeFi’s stress test passed this round, but it’s not bulletproof, and we’d be remiss not to remind readers to tread carefully in this wild west of finance.

Bitcoin’s Role: The Unshakable Bedrock?

As Bitcoin maximalists at heart, we can’t ignore the king of crypto in this storm. While Ethereum and stablecoins grabbed headlines, Bitcoin held its ground as the market’s anchor. Despite double-digit losses mirroring the broader sell-off, BTC’s dominance—the percentage of total crypto market cap it represents—ticked upward slightly during the crash, a sign that investors still see it as the ultimate safe haven in digital assets. Analysts like Andrei Grachev of DWF Labs called Bitcoin the “bedrock” for a reason: its decentralized nature, proven resilience, and status as a store of value make it the north star, even when altcoins flounder.

That said, Bitcoin isn’t immune to macro shocks like trade tariffs. Its price action on October 10 tracked closely with global risk assets, a reminder that correlation with traditional markets is a double-edged sword. For those of us pushing for financial freedom and disruption of the status quo, Bitcoin’s strength is a rallying cry—but we must acknowledge that its adoption as “digital gold” hinges on navigating these external pressures. If macro conditions worsen, even BTC might face tougher headwinds.

Expert Takes: Optimism with a Side of Caution

Industry voices are leaning toward hope, though not without caveats. Tom Lee, Head of Research at Fundstrat, didn’t hold back in his assessment of the downturn.

“Today’s dip was a good shakeout, and the market is likely to rise in a week,” Lee stated, adding, “Unless there’s a real structural change, this pullback is a buying opportunity.”

Lee’s view is that the crash cleared out speculative excess, paving the way for a cleaner rebound. But not everyone is so rosy-eyed—some warn that persistent macro pressures, like U.S.-China spats, could outweigh any short-term bounce. Andrei Grachev of DWF Labs offered a complementary perspective, focusing on the crash’s root cause.

“This crash happened not because of fundamentals like the FTX collapse. It was because of the tariffs announcement and following leveraged liquidations. Liquidity got drained, but Bitcoin and strong projects should recover quite soon,” Grachev explained.

His point cuts to the core: this wasn’t a broken protocol or scam implosion—it was a reaction to outside forces. Yet, the optimism hinges on no further shocks. If trade tensions escalate, or if a liquidity crunch hits stablecoins themselves, that recovery timeline could stretch.

The Dark Side: Altcoin Carnage and Lingering Scams

While heavyweights like Bitcoin and Ethereum weathered the storm, the crash obliterated countless lesser altcoins—a stark reminder of the space’s underbelly. Many projects, built on little more than hype and empty promises, saw their prices crater to near zero as panicked investors fled. We’ve got no patience for scams or baseless shilling here. The market needs to keep purging these fundamentally worthless tokens if it’s going to earn broader trust. Take meme coins or unproven layer-2 solutions as examples—some lost 90% of their value overnight on October 10. It’s painful for holders, but it’s a necessary cleanse. As champions of decentralization, we support innovation, but not at the expense of integrity. If you’re chasing quick gains on unvetted projects, don’t be surprised when the rug gets pulled.

Risks on the Horizon: Macro Woes and Stablecoin Trust

Recovery isn’t a done deal. If U.S.-China trade tensions boil over into harsher tariffs or broader economic fallout, crypto could face another wave of selling. Stablecoins, for all their heroics, carry their own baggage. A liquidity crunch in the stablecoin market—say, if reserves are questioned or redemptions spike—could unravel the safety net they provide. Tether’s opaque reserve history and USDC’s ties to centralized finance are Achilles’ heels we can’t ignore. Then there’s the regulatory specter: could trade disputes prompt tighter U.S. oversight of stablecoins or exchanges as a “national security” measure? It’s not far-fetched, and it’s a direct threat to the privacy and freedom we fight for in this space.

Zooming out, reliance on stablecoins also raises deeper questions about centralization. As much as they stabilize markets, they’re often a bridge to traditional finance, not a break from it. True decentralization—aligned with our push for effective accelerationism—demands alternatives that don’t hinge on trusting a handful of issuers. Are we building a freer future, or just swapping one overseer for another?

Looking Ahead: A Blip or a Warning Sign?

Comparing this crash to past crypto winters—like the 2018 bear market or the 2022 Terra-LUNA disaster—offers perspective. Back then, internal failures (scams, protocol bugs) often drove the pain. This time, it’s external macro forces, and the market’s response—stablecoin minting, DeFi grit, whale buying—shows a toughness that wasn’t there before. But toughness isn’t invincibility. If DeFi and stablecoins keep proving their mettle, this volatility could, ironically, build mainstream trust. Or persistent global shocks might keep normies on the sidelines, wary of a space that still swings like a pendulum.

For now, the crypto ecosystem has shown it can self-correct under pressure. Bitcoin remains the unshakeable core, Ethereum and DeFi fill critical niches, and stablecoins act as emergency brakes. It’s messy, chaotic, and far from perfect—but it’s a revolution worth watching. Can stablecoins keep playing hero without becoming a crutch? Are we one bad headline from a real reckoning? Only the next few weeks will tell. Stay vigilant, keep questioning, and let’s push for a decentralized future that delivers on its promise.

Key Takeaways and Questions

• What caused the crypto market crash on October 10, 2023?
  Renewed trade tensions between the U.S. and China, fueled by tariff fears, sparked a sharp sell-off amplified by leveraged liquidations draining liquidity.
• How did Tether and Circle respond to the market downturn?
  They minted $1.75 billion in new USDT and USDC stablecoins to flood the market with liquidity, aiming to stabilize prices and support traders.
• Why did Bitmine invest $104.24 million in Ethereum during the crash?
  Likely as a strategic play to buy low, banking on Ethereum’s long-term value as the DeFi backbone and anticipating a market rebound.
• How did DeFi protocols perform under the crash pressure?
  Platforms like Aave and Uniswap managed record transaction volumes with minimal downtime, showcasing significant resilience compared to past crises.
• What role did Bitcoin play during this market event?
  Bitcoin held as the market’s anchor, with slight dominance gains, reinforcing its status as a safe haven despite price drops tied to macro shocks.
• What are the risks of relying heavily on stablecoins for stability?
  Concerns over reserve transparency (especially Tether), centralization (USDC), and potential regulatory crackdowns could undermine their safety net if trust falters.
• Is a full market recovery guaranteed after this crash?
  Not at all—while analysts are cautiously optimistic, escalating trade tensions or stablecoin liquidity issues could delay or derail a rebound.