Volatility Isn’t The Enemy: Inefficiency Is

By Federico Variola, CEO of Phemex

October 10, 2025, shall be remembered because the day crypto markets skilled their largest liquidation occasion in historical past. Over $19 billion in positions evaporated inside 24 hours. More than 1.6 million merchants watched helplessly as their accounts have been forcibly closed. President Trump’s announcement of 100% tariffs on Chinese imports triggered a cascade that no person noticed coming, however the scale of destruction that adopted wasn’t nearly geopolitics.

As CEO of Phemex, I spent that day guaranteeing our merchants may handle their positions throughout the disaster. I keep in mind the second the alerts began hitting my telephone: $HYPE dropping to $25, $PEPE down 75%. My first thought was that we had a liquidity situation on our platform. I opened CoinGecko and noticed those self same costs throughout all exchanges.

While our programs held, I watched opponents’ platforms fail their customers on the worst doable second. What I witnessed wasn’t a expertise drawback. It was a management drawback.

When Infrastructure Fails, Leaders Are Responsible

In the speedy aftermath, the sample was all over the place: failed log-ins stopping account entry, failed stop-loss order execution, flash crashes the place altcoins briefly touched zero earlier than recovering. I noticed disciplined merchants lose every thing as a result of their alternate couldn’t execute their orders.

The lack of liquidity throughout all exchanges hit even platforms working easily. Exchanges like ours, with slippage safety in place, or Hyperliquid with auto-deleveraging, nonetheless confronted the impression. When liquidity evaporates market-wide, no platform is immune.

During excessive volatility, milliseconds matter. Traders with threat administration ought to be protected when markets flip violent. But threat administration solely works if the infrastructure performs. When platforms fail, technique doesn’t matter.

The majority of liquidations on October 10 hit over-leveraged lengthy positions constructed throughout Bitcoin’s rally above $125,000 earlier that week. While 85-95% of liquidations result from trader decisions, platform failures multiply the harm. When exchanges go down, protecting orders don’t execute. Manageable losses change into catastrophic wipeouts. And merchants who trusted us with their capital pay the worth for our infrastructure choices.

Every dealer who couldn’t entry their account on October 10 represents a management failure. Not their management: ours.

The Infrastructure Investment No One Sees

October 10 revealed which alternate CEOs had made the onerous option to put money into resilience, and which had merely scaled for progress.

I’m happy with Phemex’s infrastructure choices. Our programs processed orders usually all through the occasion. No widespread outages. No mass execution failures. Our merchants maintained entry to their accounts and risk management tools all through the disaster.

Reliability doesn’t come low-cost.

When constructing Phemex, I over-invested in infrastructure. When a dealer’s livelihood is on the road, uptime isn’t negotiable. We constructed:

Robust, scalable infrastructure designed to deal with surges far past our peak volumes. When order circulation spikes 10x in an hour, programs maintain or fail.

Real-time threat controls that perform below stress. Circuit breakers and place monitoring can’t have blind spots throughout essential moments.

Redundant programs that get rid of single factors of failure. Geographic distribution, backup matching engines, automated failover protocols. Every system has a backup, and each backup has been examined.

Continuous stress testing that simulates eventualities worse than October 10. We don’t anticipate actual crises to find our limits.

These rules are embedded all through our platform: from advanced order types to capital effectivity options to core infrastructure. Throughout 2025’s volatility cycles, Phemex maintained 99.9% uptime. During September’s market turbulence, when different platforms struggled, our merchants continued executing methods with out interruption.

After October 10, we instantly printed comprehensive guidance to assist merchants perceive what occurred and place for what comes subsequent. Beyond that, we established a restoration fund and provided bonuses to assist mitigate losses for affected merchants. Not as a result of our platform failed, however as a result of we consider in supporting our group throughout disaster.

What Traders Need to Know

Here’s what I inform merchants about surviving volatility.

I’ve realized this by means of years of market crises: merchants who survive are ready, not fortunate. And they select their platforms rigorously.

Set partial stop-losses at a number of ranges. Instead of 1 stop-loss order on your total place, contemplate setting a number of partial stop-loss orders at totally different worth factors. For instance, when you’re lengthy with a place of 10 BTC, you may set a stop-loss for 3 BTC at one degree, one other 3 BTC at a decrease degree, and preserve 4 BTC for guide administration. This creates layers of safety because the market strikes towards you. Note: take-profit and stop-loss orders on most platforms apply to the present order solely, so that you’ll must construction your place with this in thoughts.

Understand when remoted margin is safer. While Phemex’s cross-margin mode can present flexibility in regular situations, excessive occasions like October 10 confirmed that remoted margin would have protected most merchants higher. Cross-margin permits losses in a single place to empty your total account stability, whereas remoted margin limits your threat to the margin allotted to that particular place. In circumstances like October 10, having positions in remoted mode would have prevented complete account wipeouts for a lot of merchants.

Size for extremes, not averages. Markets that may rise 50% in weeks can even fall 15% in hours. The merchants who survived October 10 had sized their leverage for 20% swings, not 5%.

Choose reliability over advertising. Risk administration means nothing if orders don’t execute. An alternate isn’t nearly charges or options. It’s about whether or not the infrastructure performs when costs transfer violently.

The trade has did not be clear about platform reliability. Volatility doesn’t punish everybody equally: it punishes the unprepared. But preparation contains selecting a platform that gained’t fail you in a disaster.

A Challenge to My Fellow CEOs

Let me be direct: the crypto trade’s infrastructure disaster gained’t repair itself.

For too lengthy, we’ve competed on the mistaken metrics. Trading charges. Token listings. Marketing budgets. October 10 uncovered the reality: operational resilience is what separates professionals from amateurs.

Low charges are nugatory if orders don’t execute. Deep liquidity means nothing if merchants can’t entry it throughout volatility. Trading instruments are ineffective if the platform crashes when costs transfer.

Here’s what considerations me: I concern too many exchanges will be taught the mistaken lesson from October 10. They’ll provide compensation to affected customers, situation statements about “unprecedented market situations,” and return to enterprise as regular as soon as the headlines fade.

That’s not management. That’s harm management.

I’m calling on my fellow alternate CEOs to hitch me in a special method: transparency and accountability.

Publish your uptime statistics. Transparently and constantly.

Share your stress take a look at outcomes. Show merchants your programs can deal with 10x quantity spikes, not simply common situations.

Invest in infrastructure now. If you’re not prepared at present, you gained’t be prepared when it issues.

Accept accountability while you fail. Compensation packages are needed when platforms fail, however stopping these failures ought to be our main obligation.

Operate transparently as an A-book alternate. Show merchants that you simply’re not betting towards them. When exchanges function as B-book operations (taking the alternative aspect of buyer trades), there’s an inherent battle of curiosity. A-book exchanges route orders to the market, aligning the alternate’s pursuits with merchants’ success.

Interestingly, decentralized protocols like Aave, Uniswap, and Hyperliquid processed huge liquidation volumes on October 10 with out important operational disruptions. If DeFi can obtain this degree of resilience, centralized exchanges haven’t any excuse.

At Phemex, we view infrastructure as our aggressive benefit, not a price heart. Stress testing is steady, not quarterly. We design redundancy into each system from the beginning. This is the usual each alternate ought to meet.

What Comes Next

Opportunity follows disaster.

History repeats. The May 2021 crash preceded a multi-month rally. The March 2020 collapse arrange the 2020-2021 bull run. Major crashes clear leverage and create alternatives.

My prediction: the subsequent disaster shall be worse if exchanges don’t change course.

Volatility creates mispricing. Liquidation cascades shake out weak fingers. Markets that crash 12% in an hour can bounce again simply as quick. But provided that your platform works.

Smart technique beats market timing. Those who thrive aren’t those who predict each transfer. They’re those who put together for uncertainty and execute when alternative emerges. That requires infrastructure that works.

The distinction between revenue and smash is whether or not your alternate works.

Moving Forward

At Phemex, we’re constructing infrastructure that works when markets flip violent. We’re investing in programs that may deal with tomorrow’s extremes. Today’s excessive turns into tomorrow’s regular.

I’m dedicated to uptime as a elementary obligation, not a advertising metric.

Tariffs, regulatory modifications, geopolitical occasions, and market dynamics will proceed creating huge worth swings. Traders can’t management these forces. But they will management their preparation, their threat administration, and their selection of platform.

Volatility is inevitable. Inefficiency is a selection.

The October 10 liquidation proved which platforms had made the fitting selection. As crypto continues maturing towards institutional adoption, that distinction will solely develop extra necessary. The exchanges that survive and thrive gained’t be these with the flashiest options or the most cost effective charges. They’ll be those merchants can belief throughout excessive situations.

To merchants: volatility will return. Choose a platform constructed to deal with it.

To my fellow CEOs: the trade is watching. October 10 was our stress take a look at. Some of us handed. Others failed publicly. What you do subsequent will decide whether or not you lead or fail.

I do know what Phemex will do: we’ll preserve constructing infrastructure that works. That’s not a advertising slogan. It’s a dedication from me, personally, to each dealer on our platform.

The future belongs to leaders who put merchants first.

The submit Volatility Isn’t The Enemy: Inefficiency Is appeared first on BeInCrypto.