Author: Nancy, PANews

In the early hours of October 11, a shocking scene unfolded in the crypto market. Major cryptocurrencies like Bitcoin experienced a sudden crash from their highs, while altcoins plummeted like a "free fall ride." In just a few hours, nearly $20 billion in leveraged funds were liquidated, setting a record for the largest liquidation in crypto history.

This sudden storm was triggered by a chain reaction caused by a drastic change in macro policy expectations, excessive leverage, a sharp drop in liquidity, and rapidly escalating panic. Ultimately, it led to a cascading avalanche. After this epic liquidation, what remains is not only the devastating data but also the exposure of deep structural risks in the market, raising concerns about future trends.

This article by PANews compiles the market's multidimensional views on cyclical changes and market trends. Overall, the severe volatility in this round of the crypto market is both a baptism of deleveraging and an important signal of cyclical adjustment. Major cryptocurrencies have shown relatively stable performance, while altcoins, due to liquidity exhaustion and exposure to structural risks, may find it difficult to recover for some projects. In the short term, the market may still experience aftershocks and severe fluctuations, but from a medium to long-term perspective, the crash has released extreme panic and provided a window for rational positioning. For investors, the core strategy should be to control risks, select assets carefully, and deploy in batches to avoid being led by market emotions.

Historical data comparisons show that the scale of this liquidation is particularly astonishing. Quinten, co-founder of weRate, pointed out that the liquidation amount during the COVID crash in 2020 was $1.2 billion, and the FTX collapse in 2022 was $1.6 billion, while this liquidation reached a staggering $19.31 billion. He likened this event to a "new version of the COVID crash," suggesting that the market may be in the stage of forming a cyclical bottom. This tweet was subsequently retweeted by Binance co-founder CZ, drawing further market attention.

Arthur Hayes, founder of BitMEX, noted that the main reason for the significant drop in altcoins this time is the rumored centralized exchange's cross-margin automatic collateral liquidation mechanism. He also stated that for traders placing buy orders at low levels, this is a rare opportunity, as many quality altcoins will find it difficult to return to previous lows in the short term.

Another crypto KOL, Benson Sun, expressed that this round of deleveraging is the most thorough in the cycle. Risk leverage has been completely wiped out, and market bubbles have been fully squeezed. Nevertheless, he remains optimistic about the fourth quarter's performance and plans to spend about a month implementing a batch investment strategy to lay out the market in a stable manner.

From the perspective of capital structure, the analysis platform CryptoOnchain pointed out that Bitcoin is currently testing the "cost price defense line" of newly emerged whales, which represents the average holding cost of large new funds entering the market. Historically, whales tend to defend this cost line to avoid losses, and this position has become a strong demand bottom multiple times in the past (twice since August). The core suspense in the current market is whether whales will step in to defend the market again. Therefore, the upcoming trend (i.e., the reaction at key positions) is crucial.

Trader Eugene reminded that the market has shown structural damage and has entered the next phase of the cycle, requiring investors to remain vigilant. DeFiance Capital researcher Kyle added that this crash can be seen as a "cycle-ending event." Although market sentiment is as panicked as during the FTX and Celsius collapses, Bitcoin and Ethereum remain relatively stable, indicating the evolution of the crypto industry complex. However, altcoins continue to repeat their tragedies. He emphasized that it may not yet be the best time to buy the dip, but the release of extreme panic means the market is gradually building a bottom. While there may still be room for further declines, in the long run, it is certainly closer to the bottom than to the top. He also reminded that asset selection is crucial at this moment, as many projects may never recover.

From a more macro perspective, the CEO of Bitget stated in an exclusive interview with PANews that the characteristics of this cycle differ from previous ones, with Bitcoin's pricing power increasingly leaning towards Wall Street and institutions, significantly enhancing its correlation with U.S. stocks, especially those of tech giants. Although the current market is volatile, it remains in a low range from a long-term perspective, making it a good time for investors to re-enter. However, those still adopting aggressive long or high-leverage strategies should timely shift to a defensive mode.

Some market observers have further raised warnings. Crypto KOL "Artist" bluntly stated that the altcoin season has ended, "the car is empty; if individual altcoins can catch a hot topic or good news, it will be very easy to pump. But if (with a 5% probability) it is a local rebound in a bull tail, then this round of washing has achieved a similar effect to May 19, 2021." Crypto analyst @ali_charts also believes that this liquidation is very similar in scale and context to the bull tail crash of 2021. The market is at a local high point, with accumulated leverage triggering chain liquidations, and the plot is almost replaying. While this rebound may be seen as a buying opportunity, caution is crucial. Such large-scale liquidations often signify a shift in market structure rather than a temporary decline. This event may represent the market top, after which a deeper pullback may begin. Currently, if holding long positions, strict risk management is essential, and traders should ensure that stop-loss orders are activated and position sizes are controlled.

Nothing Research Partner Allen Ding added that such a large-scale liquidation requires a weekly recovery time. Declines typically do not happen all at once; after an earthquake, there will be aftershocks. In the short term, market liquidity is exhausted, volatility is amplified, and prices may fluctuate violently. However, in the medium to long term, the larger the drop, the more potential opportunities for small coins, as gains often emerge from declines.

Renowned crypto analyst CryptoCapo bluntly stated that altcoins have undergone a historic liquidation, but major coins have not fully retraced, and there is still downward space. Some coins may even fall below the current "buy zone." Bitcoin remains firmly above $100,000, but there is still a gap to the $60,000–$70,000 range needed for a complete correction, and downward risks remain significant. Meanwhile, traditional markets are showing structural cracks, which could trigger short-term global volatility under certain conditions, paving the way for the next phase of market restart. He expects a brief consolidation in the market over the weekend, but as global markets reopen next week, greater downward space may follow.

Crypto researcher Haotian expressed concerns from the perspective of industry development, stating that this black swan event has left him with a sense of despair. He initially thought the current crypto market was a "Three Kingdoms Kill": the tech faction innovating, exchanges driving traffic, and Wall Street laying out funds. Divine beings fighting, while retail investors get the meat. However, after this bloodbath, it became clear that they may not be competing at all, but rather colluding to harvest all liquidity in the market. Currently, the liquidity of altcoins has been drained, project teams find it difficult to save themselves, and the market is no longer buying into innovation. If this situation continues, the monopoly of exchanges draining liquidity, Wall Street's precise harvesting, and the double killing of retail investors and tech factions will be a catastrophic end to the past cyclical play of Crypto.

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