Two months have passed since the historic liquidation cascade triggered by Trump’s tariffs headline, and the Bitcoin market is still feeling the effects. The cryptocurrency is currently trading in the mid-$80,000 range, but the sentiment is vastly different from what it was in early October, when everyone was optimistic about the next rise. According to data from AP, there has been a sharp decline in confidence since the October 6 peak, with the market losing steam over the weeks.
A closer look at the data reveals that the market has indeed changed since October 10th. The question on everyone’s mind is: what actually changed after that date? To answer this, it’s essential to understand the events that unfolded on October 10th and how they impacted the market.
The Night Crypto Became the World’s 24/7 Risk Gauge
October 10th started as a macro story, but it quickly spread to all corners of the crypto market. Trump’s tariff announcement triggered panic selling, low liquidity, and a leveraged market was forced to turn into thin books. Coin Metrics described this event as “The Great De-Leveraging,” which is a fitting term, as it was not a normal collapse, but a system cleanout. The numbers were brutal, with over $19 billion in leveraged positions being liquidated, sparking an immediate rush to hedge against downside risk in options markets.
Liquidity Disappearance
When people say “there is no offer,” it means that there are not enough real buy orders near the current price to absorb the decline, so the price has to fall even further to find someone willing to take the other side. Kaiko’s analysis revealed that there was almost nothing near the median price on several exchanges, and meaningful bids appeared further out, around 4% and 10% away from the median. This is what a liquidity drought looks like when volatility occurs.
A Liquidation Spiral that Hit Alts like a Truck
Bitcoin fell sharply, and the rest of the market collapsed. The cryptocurrency fell by more than 14% in the October 10-11 window, and it also reminded everyone how quickly the move came after the October 6 record. Coin Metrics added that it was a cascade of forced reversals, price distortions, and leverage wipeouts, which made the move feel so violent. Altcoins were also severely affected, which is important because this part of the market needs reflexive dynamics to survive.
The Binance Question
Many of the “something is broken” rumors revolve around Binance and the collateral faults that emerged during the crash. Coin Metrics named Ethena’s synthetic dollar, USDe, as one of the most notable victims. USDe briefly traded well below $1 on some trading venues, and Binance later publicly addressed the incident, refunding about $283 million after USDe, BNSOL, and wBETH briefly de-pegged during market turmoil.
The Post-10/10 Regime
Fast forward to December, and it’s clear why people keep claiming that the offer never came back. Liquidity on the spot market remains low, even after prices have stabilized, indicating that the top-of-book depth on the most important trading venues remains well below the level at the beginning of October. A leverage reset has also been described, corresponding to the change in sentiment, open positions have been heavily flushed, funding has weakened, and the market has not re-established the same directional conviction.
What’s Next?
To understand what’s next, it’s essential to keep an eye on three key metrics: ETF flows, the depth of the backlog, and the leverage and security of the collateral. If these metrics turn in the right direction at the same time, there could be a real regime shift back towards risk-taking. However, if they stay mixed, the market will likely remain volatile, with air pockets and a punishing environment for anyone who gets cocky.
Conclusion
The October 10th crash has many villains, including leverage, low liquidity, fragmented trading venues, and collateral distortions. However, the simpler explanation is that it was the largest forced settlement event cryptocurrencies have ever experienced, and it left the market in recovery mode. Two months later, the chart looks like boredom, and the market feels like something broke. In a way, it was. For more information, visit https://cryptoslate.com/crypto-traders-say-something-broke-after-in-october-the-data-says-the-market-really-did-change/
