Bitcoin: One year after massive liquidations, the market remains tense

On October 10, 2025, the cryptocurrency market suffered a brutal crash that led to nearly 19 billion dollars in liquidations. A few days after a historic record above 126,000 dollars, bitcoin quickly lost part of its value. One year later, traders have better tools to monitor risks. Yet, leverage, excessive positions, and the weight of derivatives continue to weaken the market.

Bitcoin faced the memory of the October 2025 crash

On October 10, 2025, the market experienced one of its most violent episodes. After exceeding 126,000 dollars, bitcoin saw its price drop from around 122,000 to 105,000 dollars. Most of this decline happened within minutes. This rapid drop surprised many investors who were still anticipating a price increase.

The collapse caused about 19 billion dollars in liquidations on cryptocurrency markets. These liquidations affected traders who had taken large positions using leverage. Their bets were notably based on the continuation of the rise and on historical market cycles. When prices reversed, these positions suffered fast losses.

For Mark Connors of Risk Dimensions, the magnitude of the move surprised market participants. This former head of a hedge fund positioning product at Credit Suisse highlights the weight of trader positioning.

It was a very fast and brutal market peak that we didn’t expect; positioning was significant then, and it still is today.

Mark Connors, Risk Dimensions. Source: CoinDesk.

According to him, investors had accumulated significant long positions before the crash. This concentration of bets increased their exposure when the market abruptly changed direction.

Leverage remains at the heart of market risks

Before the crash, open interest approached its highest historical levels. This indicator measures the number of derivative contracts still active in a market. At the same time, many traders anticipated a new bitcoin rally. Some even considered targets between 250,000 and 400,000 dollars, relying on previous cycles.

However, the crash showed the limits of these expectations. Connors estimates that “the movement mainly came from derivatives rather than blockchain data.” In other words, price variations can result from financial positions taken on the asset, without directly reflecting actual demand. This distinction remains essential to understand rapid market moves.

Perpetual futures contracts illustrate this dynamic. They allow traders to speculate on price changes without directly holding the cryptocurrencies involved. These instruments still hold an important place in trading, while platforms have financial reasons to continue offering leveraged products. Consequently, the same mechanisms that can amplify an uptrend can also accelerate a downturn.

More precise monitoring tools for traders

Since October 2025, market participants have had additional information to assess their exposure. Connors notably highlights progress in the analysis of order books and positioning. These data help traders better understand market structure. However, they do not allow predicting with certainty the next price movement.

Chris Sullivan, co-founder of Hyperion Decimus, recommends first limiting leverage use. He also advises monitoring open positions, funding rates, and general market sentiment. These indicators can reveal an excessive accumulation of bets in one direction. Their combination thus allows spotting certain situations where the market becomes more vulnerable.

Funding rates deserve particular attention on perpetual contract markets. They reflect the cost associated with maintaining certain positions and provide indications about trading conditions. Meanwhile, open interest informs on the extent of still active commitments. When these measures reach extreme levels, Sullivan recommends patience rather than hasty decisions, whether traders anticipate a rise or a fall.

Bitcoin holders must also protect their assets

The lessons from the crash also concern investors who wish to hold their assets for a long time. Sullivan recommends that they buy their bitcoins, then transfer them off exchange platforms to a secure place of custody. This approach limits their direct exposure to risks linked to keeping funds on a trading platform. It also distinguishes holding the asset from speculating on its short-term price changes.

This caution does not mean investors can eliminate all risks. Rapid price moves remain possible, even when traders monitor their positions more closely. Connors reminds that leveraged products are still present in the market. A new episode comparable to that of October 10, 2025, thus remains possible, despite progress made in data analysis.

Increased visibility nevertheless constitutes a notable change since the previous crash. Traders can better spot certain imbalances and measure their exposure before making decisions. However, having better tools does not guarantee a sufficiently swift reaction or complete protection from losses. Risk management thus remains a central issue for investors active in derivatives markets.

The four-year cycle questioned after the fall

The crash also challenged another market belief: the ability of the four-year cycle to guide price expectations. This cycle is notably based on the periodic reduction of rewards given to miners. Before October 2025, some investors believed this mechanism could herald new peaks. However, the severity of the drop showed this reference was not enough to explain market movements.

Connors considers that the four-year cycle has not disappeared but that it has evolved:

The four-year cycle is not dead; it has changed, and we can no longer rely on it as much as before.

Mark Connors, Risk Dimensions. Source: CoinDesk.

According to him, investors can no longer base their confidence on this model as before. Economic and political factors may now play a larger role in bitcoin’s fluctuations. This evolution complicates forecasts based solely on historical trends.

Moreover, the development of institutional investment products has not eliminated the influence of derivatives on short-term prices. The arrival of new actors does not prevent speculative positions from causing rapid moves. One year after the crash, Connors nevertheless believes investors pay more attention to market structure. This awareness represents one of the main lessons of the episode.

As the first anniversary of the October 10, 2025 crash approaches, the market thus retains a better understanding of its mechanisms, without having removed its main sources of fragility. Future developments will notably depend on trader positioning, leverage use, and the weight of derivatives. For BTC, investors’ ability to manage these risks will remain decisive. The market survived this drop, but nothing guarantees that the next shock will produce the same consequences.