Bitcoin Price Plummets Before Bouncing Back Amidst Rising Market Tensions
Bitcoin price is navigating through one of its most delicate phases of the cycle. The price action speaks for itself. The data is unequivocal. The atmosphere in the crypto space is charged, teetering on the edge of fragility. Bitcoin price dipped to a low of $80,524, marking its lowest point since April—a level that caught many off guard, as it was not anticipated to resurface this year. The decline sent the bitcoin price plummeting over 35% beneath its all-time peak, wiping out all year-to-date profits and pulling down risk sentiment throughout the broader market. Following the dip, Bitcoin’s price has surged back to the $84,000 range, highlighting significant volatility in the crypto markets. According to data, realized losses have surged to levels reminiscent of the November 2022 FTX capitulation. Short-term holders — those who acquired their assets in the last 90 days — are liquidating their positions en masse. Their selling is currently dominating the market activity. Realized-loss dominance has skyrocketed into a territory typically associated with panic. The market structure is experiencing a breakdown. Analyst highlighted that Bitcoin is currently trading over 3.5 standard deviations beneath its 200-day moving average.
This specific type of deviation has been observed only three times over the past ten years: late 2018, during the March 2020 crash, and in June 2022 with the Three Arrows/Luna collapse. Every event signified a period of intense anxiety, compelled liquidation, and fatigue. This week has a familiar vibe. Funding rates have plummeted. Spot sellers have emerged. Momentum traders have disappeared. The market’s marginal buyer, the one who pursues strength, has just taken a backseat. Some analysts highlight macro pressures. Expectations for a rate cut have diminished. AI stocks have experienced a significant decline. Volatility surged throughout traditional markets. Crypto faced an uphill battle. In light of recent developments, the bitcoin price pullback is approaching the $78,000 to $82,000 range outlined in Giovanni Santostasi’s Bitcoin power-law model. This area has a history of producing mid-cycle bounces instead of cycle lows, providing a glimmer of optimism for bulls as the price revisits levels seen multiple times in 2024. Some individuals highlight the “mechanical glitch” that occurred on Oct. 10. According to Tom Lee, a malfunction in the stablecoin price feed led to a series of cascading liquidations across various exchanges. Almost two million accounts were erased before anyone became aware of the unfolding situation. The market, he contended, has been “limping along” ever since.
On October 10, the crypto market faced a significant “flash crash” and deleveraging event, sparked by an unforeseen U.S. tariff announcement that reverberated through global markets. This led to more than $19 billion in leveraged positions being liquidated in just a few hours, making it one of the largest single-day wipeouts in the history of cryptocurrency. The aftershocks of the crash continue to resonate in the market today. Some observers perceive intentional pressure. Mike Alfred has alleged that major players are driving Bitcoin prices down via derivatives. Lee stated his agreement. The likelihood of revisiting new all-time highs in the upcoming weeks has fallen below 50%, unless significant levels are regained. According to analysts, the fundamental principle of purchasing every dip is losing its reliability as a strategy. In downtrending markets, it’s not unusual to see multiple failed dips, and the Short-Term Holder Realized Price — which has historically served as a pivot for recoveries — is currently functioning as resistance. In the current landscape, broader cost-basis metrics like Realized Price and the 200-Week Moving Average are positioned in the mid-$50Ks and are gradually increasing. This trend indicates that potential value zones could emerge in the range of $55K to $65K or even higher, contingent on the duration of the ongoing weakness.
Supply-demand indicators suggest a need for caution. The VDD Multiple is on the rise while the price declines, indicating that seasoned holders are in the process of distributing rather than accumulating. The supply of long-term holders is on the decline, indicating that the market continues to unwind. Funding rates and derivatives positioning have yet to exhibit the usual capitulation extremes typically observed at significant market bottoms. For the bear case to be dismissed, Bitcoin needs to reclaim the $100K mark, the STH Realized Price, and the 350DMA with consistent closes. Until then, a cautious, analytics-based strategy is preferred over bold dip acquisitions.
