Bitcoin Stabilizes After Record Liquidation Event

Market Overview

The cryptocurrency market is showing signs of stabilization following what analysts are calling the "largest liquidation event in crypto history" on October 10-11, which saw an unprecedented $19.5 billion in leveraged positions wiped out in under 24 hours. Bitcoin plunged from its recent all-time high above $125,000 to briefly below $102,000, representing a drop of approximately 20%.

This market crash was primarily triggered by US President Donald Trump's announcement of 100% tariffs on Chinese imports, creating a ripple effect across global financial markets. The timing of the announcement late Friday after US markets had closed left the 24/7 crypto market particularly vulnerable, resulting in a cascade of forced liquidations that affected over 1.6 million traders.

Despite the severity of the crash, Bitcoin has since recovered to around $111,000-$114,000, with several analysts suggesting this correction was a healthy pullback designed to shake out excessive leverage before the next leg up. On-chain data shows that while apparent demand has turned negative for the first time since July, institutional interest remains strong with Bitcoin ETFs maintaining "Uptober" momentum with $2.71 billion in weekly inflows.

Major Negative News

• Record-Breaking Liquidation Event: A total of $19.5 billion in leveraged positions were liquidated between October 10-11, making it the largest crypto wipeout in history, nearly tenfold larger than any prior event including the FTX collapse.
• Trump's China Tariff Announcement: President Trump's declaration of 100% tariffs on Chinese imports triggered the market crash, with some analysts suggesting the timing of large Bitcoin sales before the announcement raises questions about potential information leaks.
• Negative Apparent Demand: Bitcoin's 30-day apparent demand has dropped to -13,707 BTC, marking the first negative reading since July, suggesting a short-term cooling in investor appetite.
• Profit-Taking Reaches $2.25 Billion: Following the market crash, realized profits climbed as high as $2.25 billion, the fourth-highest level seen in the current market cycle, indicating significant selling pressure.
• Hyperliquid Whale Investigation: An investigation has tied a Hyperliquid whale controlling over 100,000 BTC to Garrett Jin, the former BitForex CEO whose exchange collapsed amid fraud probes, raising concerns about market manipulation.
• UK Investment Giant Warns Against Bitcoin: Hargreaves Lansdown, a major British investment platform, has warned users to stay away from Bitcoin, claiming crypto has "no intrinsic value."

Major Positive News

• Analyst Predicts Powerful Rebound: A market analyst who accurately predicted the recent crash now forecasts a powerful rebound phase for Bitcoin in the coming weeks, with a potential move to $150,000-$180,000 by the end of Q4.
• Bitcoin ETF Inflows Remain Strong: US spot Bitcoin ETFs logged $2.71 billion in weekly inflows despite market turbulence, demonstrating continued institutional confidence in the asset.
• Golden Cross Retest: Bitcoin is retesting the golden cross, a bullish technical pattern that has historically preceded major rallies, with analysts suggesting a breakout above $110,000 could trigger another significant upward movement.
• BlackRock's Bitcoin ETF Success: BlackRock's Bitcoin ETF is reportedly topping profit charts, indicating strong performance and institutional interest in Bitcoin.
• Morgan Stanley Expanding Crypto Access: Morgan Stanley is reducing restrictions on crypto fund investments for its wealth clients, broadening access to digital assets as Bitcoin and Ethereum rise in value.
• Nobel Peace Prize Winner Supports Bitcoin: This year's Nobel Peace Prize winner, Venezuelan opposition leader María Corina Machado, has previously expressed support for Bitcoin, referring to it as "resistance money."

Key Risk Factors

• US-China Trade Tensions: Escalating tariff threats between the US and China could continue to create market uncertainty and volatility.
• Regulatory Scrutiny: India's investigation into 400 Binance traders for alleged tax evasion signals increasing regulatory pressure in major markets.
• Satoshi's Dormant Bitcoin: The potential movement of Satoshi's estimated $100 billion Bitcoin hoard could have unexpected and potentially disruptive outcomes for the market.
• Banking Trojan Targeting Crypto: The Astaroth Banking Trojan is using GitHub to steal crypto credentials, posing a security threat to holders.
• Excessive Leverage: The recent liquidation cascade demonstrates the systemic risk of overleveraged positions in the crypto market.
• Technical System Failures: Binance's promise to compensate users for losses due to technical failures during the liquidation event highlights infrastructure vulnerabilities during high volatility.

Conclusion and Outlook

The cryptocurrency market is showing resilience following what many analysts are calling a necessary correction rather than a fundamental shift in market direction. The flash crash, while dramatic, appears to have served the purpose of flushing out excessive leverage and weak hands, potentially setting the stage for healthier market conditions moving forward.

On-chain metrics suggest that while short-term sentiment has turned bearish, with the Fear and Greed Index flipping from "Greed" to "Fear" in 24 hours, the underlying market structure remains intact. Multiple analysts, including those who correctly predicted the crash, are forecasting a strong recovery phase beginning in mid-October, with potential targets for Bitcoin between $150,000-$180,000 by year-end.

Institutional interest continues to provide a strong foundation for the market, with record ETF inflows persisting despite the volatility. The entrance of traditional financial giants like Morgan Stanley expanding crypto access and BlackRock's successful Bitcoin ETF performance indicates growing mainstream acceptance that could fuel the next leg up.

*Key Monitoring Points*: Watch for stabilization in the $109,000-$114,000 range as a sign of market strength, monitor US-China trade developments for potential macro impacts, track ETF inflows for continued institutional interest, and observe funding rates in the futures market for signs of excessive leverage rebuilding.

※ This report is provided for informational purposes only and is not investment advice or a recommendation. Investment decisions should be made at your own discretion and risk.

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