Bitcoin: $20 Billion Liquidated, But This Explosive Chart Pattern is Reemerging (October 2025)
- The Great Leverage Purge: What Just Happened?
- History Rhymes: The Washout Before the Rally
- Macro Winds Are Shifting (Slowly)
- The Trader's Dilemma: Fear vs Opportunity
- Key Levels to Watch
- FAQs: Your Burning Questions Answered
The crypto market just experienced its most brutal leverage purge since 2024, with $20 billion evaporated in 48 hours. But hidden in the wreckage? A familiar chart pattern that preceded every major Bitcoin rally since 2020. We analyze the technicals, macro triggers, and why seasoned traders are quietly accumulating despite the bloodbath.
The Great Leverage Purge: What Just Happened?
Monday morning felt like a scene from "The Big Short" for crypto traders. A surprise escalation in US-China trade tensions triggered a cascade of liquidations, wiping out $20 billion in Leveraged positions. Bitcoin plunged below both its 50-day and 200-day moving averages, dragging Ethereum to $3,900 and Solana below $195. The total crypto market cap briefly touched $3.6 trillion - still 6% below pre-crash levels as of October 15, 2025.
History Rhymes: The Washout Before the Rally
Here's where it gets interesting. The BTCC research team notes this exact pattern played out three times before:
- March 2020: COVID crash liquidated $13B → 600% BTC rally
- July 2021: China mining ban wiped $18B → 120% surge
- January 2024: ETF approval volatility → current bull run
"These flushouts create ideal entry points," explains Alex Kuptsikevich of FxPro. "Weak hands get shaken out, open interest resets, and the market can MOVE higher with less overhead resistance."
Macro Winds Are Shifting (Slowly)
Two developments helped stabilize markets:
- China clarified its rare earth restrictions aren't a full embargo
- Former President Trump stated the US seeks "cooperation, not conflict" with China
Polymarket's prediction markets now price a 26% chance of full-blown trade war, down from 38% pre-weekend. bitcoin has since recovered to $113,000 (up 1.3%), with ETH testing $4,200.
The Trader's Dilemma: Fear vs Opportunity
Crypto's Fear & Greed Index rebounded from 24 (extreme fear) to 42 (still fear). But traders remain cautious - volumes are thin and implied volatility sits at 62%. The Kobeissi Letter framed it perfectly: "This wasn't structural collapse, just a technical margin cascade."
Key Levels to Watch
Bitcoin's current range ($110K-$114K) tells the whole story:
| Scenario | Trigger | Implications |
|---|---|---|
| Bullish | Daily close >$115.5K | Invalidates short-term downtrend |
| Bearish | Break | Risk of retesting $105K support |
The MACD still favors sellers, but that could change faster than a meme coin's Twitter hype. One positive divergence? Open interest is rebuilding without excessive leverage.
FAQs: Your Burning Questions Answered
Is this really similar to past bull market setups?
In my experience analyzing cycles since 2017, yes - but with caveats. The 2020 and 2021 rebounds had Fed liquidity tailwinds we don't have today. That said, the leverage reset is textbook.
What's the biggest risk right now?
Geopolitics, full stop. Another US-China flare-up could trigger round two of liquidations. I'm watching Treasury yields as my canary in the coal mine.
How are institutions reacting?
Coinbase institutional flows show smart money buying the dip, especially between $108K-$110K. Retail? Still licking wounds from last week's carnage.
