Two months after Trump’s tariff headline detonated a historic liquidation cascade, Bitcoin is still stuck in a different kind of market, one with less leverage, thinner liquidity, and a weaker bid from ETFs
Bitcoin is sitting in the mid $80,000s again, and the vibe feels nothing like early October, when everyone was still talking like the next leg up was inevitable, AP captured the mood shift in hard numbers, a deep drawdown from the Oct. 6 peak and a market that has been bleeding confidence for weeks.
If you spend time on crypto X, you have seen the argument playing out in real time, traders saying the market’s “pipes” got wrecked on 10/10, other traders saying this is just what risk looks like when the music stops.
Under the noise, there is a real question worth answering.
What actually changed after October 10?
The night crypto became the world’s 24/7 risk meter
October 10 started as a macro story, and it did not take long to spill into every corner of the crypto casino. Trump’s tariff announcement triggered panic selling and low liquidity, setting up the biggest liquidation event the market has ever seen.
Coin Metrics laid out the sequence in a way that makes the move feel less mysterious:
the macro headlines hit, liquidity providers backed away, and a leveraged market got forced to unwind into thin books.
Coin Metrics called it “The Great De-Leveraging,” and the framing fits, this was not a normal dip, this was a system purge.
By the time the dust settled, the numbers were brutal. More than $19 billion in leveraged positions were liquidated, a wipeout that dwarfed previous crash days, and sparked an immediate rush for downside hedges in options markets.
That scale matters, because once you cross a certain threshold, price stops being a clean reflection of “what people think,” it becomes forced selling, margin calls, and automated unwinds pushing the market into empty air.
The part traders felt in their bones, liquidity vanished
When people say “there’s no bid,” they are talking about something simple.
They mean there are not enough real buy orders close to the current price to catch the fall, so price has to drop farther to find someone willing to take the other side.
Kaiko put a microscope on this, and the conclusion was ugly, on several exchanges there was almost nothing near the mid price, and meaningful bids showed up further out, around 4% and 10% from the mid, most visibly on Binance, Crypto.com, and Kraken.
That is what liquidity drought looks like when volatility hits.
Coin Metrics saw the same story through a different lens, it looked at Binance’s BTCUSDT order book depth within plus or minus 2% of the mid.
In typical conditions, that depth is thick enough to absorb normal selling, during the crash, it thinned dramatically, and modest sell pressure created outsized swings.
That is what “plumbing” looks like in crypto, the market can feel liquid right up until the moment it doesn’t.
A liquidation spiral that hit alts like a truck
Bitcoin fell hard, and the rest of the market fell through the floor.
Bitcoin dropped more than 14% during the Oct. 10 to 11 window, and it also reminded everyone how quickly the move came after the Oct. 6 record.
Coin Metrics added the detail that explains why the move felt so violent, this was a cascade of forced unwinds, pricing dislocations, and leverage wipeouts, it was not just people “deciding” to sell.
It also noted that altcoins were hit harder in the deleveraging, which matters because that is the part of the market that needs reflexive momentum to survive.
That dynamic does not just cause a red day, it changes behavior for weeks afterward, market makers get cautious, retail traders get smaller, and every bounce feels suspect.
The Binance question, what happened, and what we can actually say
A lot of the “something broke” talk keeps circling back to Binance and the collateral dislocations that surfaced during the crash.
The cleanest way to talk about it is to separate what was the broad market structure from what was venue-specific.
Coin Metrics flagged Ethena’s synthetic dollar, USDe, as one of the notable casualties, it described how the peg mechanism depends on hedged positions and market functioning, and how USDe is used as margin collateral on centralized exchanges, including Binance.
During the crash, Coin Metrics said USDe briefly traded far below $1 on some venues.
Binance later addressed the episode publicly.
Binance said it reimbursed roughly $283 million after USDe, BNSOL, and wBETH briefly depegged during the market turmoil, and said users were fully compensated within 24 hours.
That is the kind of venue-specific gap that makes traders feel like the rules changed overnight.
If your collateral can trade far off peg on one venue, and liquidations can trigger off that local price, then your risk model is only as good as the weakest market you trade on.
Here is the clean takeaway.
Macro shock lit the match, liquidation mechanics threw gasoline, thin order books turned it into a firestorm, and venue-specific collateral and pricing dislocations made parts of the market even more fragile.
The post 10/10 regime, why the market still feels wrong
Fast forward to December, and you can see why people keep saying the bid never came back.
Spot market liquidity remains thin even after prices stabilized, and it points to top-of-book depth staying well below early October levels across major venues.
It also described a leverage reset that matches the mood shift, open interest got flushed hard, funding softened, and the market has not rebuilt the same directional conviction.
If you want the human version, traders got burned, the market makers got cautious, and the system stopped offering easy follow-through.
That is why “alt season” talk died so quickly.
ETFs stopped being a tailwind, and that matters more than most people want to admit.
Crypto spent most of 2024 and the first part of 2025 learning how to trade alongside an institutional wrapper, the spot bitcoin ETF.
When flows are positive, it is a steady source of demand; when flows turn negative, it drags on sentiment, and it makes dips harder to buy with confidence.
Investors pulled $3.6 billion out of spot bitcoin ETFs in November, the largest monthly outflow since launch. Investors also pulled a record $523 million from BlackRock’s IBIT in a single day, and the piece described a broader shift in sentiment back toward gold.
You can argue about narratives all day, flows are harder to argue with.
Macro is back, and it is not going away soon.
One of the biggest changes after Oct. 10 has nothing to do with crypto’s internal politics. Crypto got dragged back into macro.
Bitcoin’s shifting relationship with risk assets and with gold across different regimes frames the Oct. 10 flash crash as a reminder that macro shocks can transmit through crypto faster than through anything else, because crypto never closes.
To put the same point in plain language, risk has been coming out of the system, bonds and gold have looked safer, and bitcoin has traded like a high beta asset while tech wobbled.
So what changed after Oct. 10, in one sentence:
The market moved into a thinner, more cautious regime after a historic forced unwind, and that shows up in liquidity, leverage, and flows.
That is why so many traders feel like the rules are different now.
What I’m watching next, because this is where the next move comes from
I keep coming back to three dials, and they are all measurable.
The first is ETF flows, because that is where the marginal bid has lived for most of this cycle.
The second is order book depth, because thin books turn every surprise into a bigger move than it should be.
The third is leverage and collateral health, open interest, funding, and the stability of the collateral people use to trade.
If that foundation is shaky, everything built on top of it is shakier than it looks.
If those three dials turn the right way at once, you get a real regime shift back toward risk appetite. If they stay mixed, you get chop, air pockets, and a market that punishes anyone who gets cocky.
The part nobody likes, the market can feel broken without a single hidden villain
The replies to that X thread are a good reminder of how humans process pain.
When you lose money, you want a culprit, a neat explanation, and closure.
The Oct. 10 crash has plenty of villains if you want them, leverage, thin liquidity, fragmented venues, and collateral dislocations, it also has a more straightforward explanation, it was the biggest forced unwind event crypto has ever seen, and it left the market in recovery mode.
Two months later, the chart looks like boredom, and it feels like something broke. In a way, it did.
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