The crypto world got a brutal wakeup call on October 10, 2025, when President Trump's announcement of hefty tariffs on China sent shockwaves through the markets. Bitcoin tumbled 10%, dropping from around $122,000 to $107,000, while major altcoins like Ethereum, Solana, and XRP saw losses between 15% and 30%. But if you were holding meme coins—those fun, volatile tokens often inspired by internet jokes and trends—you might have felt the pain even more intensely. Reports show some shitcoins, a slang term for low-cap meme tokens, plunged over 80% in mere minutes, leading to a staggering $19 billion in liquidations across the network.

This kind of event, known as a "liquidation flush," happens when leveraged positions—bets on price movements using borrowed money—get wiped out en masse as prices drop sharply. It's like a domino effect: one big sell-off triggers automatic sales to cover loans, pushing prices down further. According to data from Coinglass, over 1.6 million traders were affected, with the largest single liquidation hitting $203 million on an Ethereum long position.

In the midst of this chaos, Tushar Jain, co-founder and managing partner at Multicoin Capital, shared a timely reminder on X (formerly Twitter). In his post, he drew parallels to the 2022 crypto winter, saying: "One of my biggest lessons from 2022 is that it takes some time for all the bankruptcies to reveal themselves after a big liquidation flush like this. Big trading shops are running around trying to figure out what their exposure to insolvent counterparties is and that takes time."

What does this mean for meme coin enthusiasts? Meme tokens, like DOGE, SHIB, or newer ones tied to viral trends, are particularly vulnerable in these scenarios. They're often traded with high leverage on platforms like Binance or decentralized exchanges, amplifying both gains and losses. During this crash, Chinese meme coins and other low-liquidity assets got hammered the hardest, with some recovering partially but others leaving holders in the dust. For instance, tokens like TRUMP dipped to $1.5, offering bargain buys for the brave, but many investors faced total wipeouts.

Jain's warning hits home because history repeats itself in crypto. Back in 2022, after the Terra-Luna collapse and FTX's implosion, it wasn't the initial drop that killed off players—it was the cascading bankruptcies that followed. Companies like Three Arrows Capital and Celsius revealed their overexposure to bad bets weeks or even months later, dragging the market deeper into bear territory. Today, with trading firms scrambling to assess their ties to potentially insolvent counterparts (think over-leveraged funds or protocols), we could see similar fallout. This is especially risky for meme coin projects, which often rely on hype and community funding rather than solid fundamentals.

While the majority suffered, a savvy few turned the dip into opportunity. One whale pocketed $72 million by shorting BTC and ETH, and spot traders who bought low on assets like XRP at $1.25 or DOGE at $0.095 reaped rewards as prices bounced back. Even stablecoins like USDe depegged temporarily to $0.63, allowing quick flips for profits. But as Jain notes, patching these holes takes time—sometimes weeks, sometimes months—depending on how entities shore up their balances.

For blockchain practitioners and meme token fans, this is a stark reminder to manage risk. Diversify your portfolio, avoid excessive leverage, and stay informed on geopolitical events that can sway markets, like these tariffs escalating U.S.-China trade tensions. As we monitor the aftermath, keep an eye on platforms like CoinDesk or Bloomberg for updates on emerging bankruptcies.

In the volatile world of meme coins, events like this separate the diamond hands from the paper ones. What's your take—will we see more insolvencies, or is this just a blip? Share your thoughts in the comments below.