October 10th Crash | Institutional Demand Dwindles Amid Bitcoin Struggles
Edited By
Samantha Reyes
In a dramatic market shakeup, Bitcoin has retreated to around $90,000 after a week of volatility. The October 10th liquidation event, which triggered over $19 billion in forced liquidations, has taken a harsh toll, knocking approximately 30% off Bitcoin's all-time highs and erasing most of this year's gains.
Significant Market Impact
The fallout from the October crash is not just a blip.
Institutional Backlash: Institutional demand has clearly softened, illustrated by notable outflows from spot Bitcoin ETFs. BlackRock's iShares Bitcoin Trust saw $523 million exit in just one day—its largest outflow since launching.
High Leverage Still in Play: The appetite for risk remains. Open interest in Bitcoin perpetual futures spiked last week by more than 36,000 BTC, equating to roughly $3.3 billion. This marks the highest increase since April 2023, according to K33 Research.
Potential for Another Crisis: K33 argues that rising open interest brings disproportionate risk, as many traders find themselves over-leveraged. They warn that similar historical patterns have often led to continued declines in Bitcoin’s value.
"Bitcoin tends to lose more ground in such conditions," K33 cautioned, explaining that in six of the last seven similar instances, the cryptocurrency fell over the following month.
Varied Sentiments Among People
Reactions across forums show a blend of disbelief and pragmatism. Many question the rationale behind trading decisions that seem speculative at best. One commenter remarked, "Why do people lose their minds when markets don’t go only up?” Others note that previous corrections were part of a natural cycle.
“It’s just a healthy correction,” one user stated, emphasizing that dips are expected.
However, concerns run deep. Another commented, “There is nothing stopping Bitcoin from going down another 50% from here.”
Key Observations
⚠️ Spot Bitcoin ETFs facing heavy outflows, with BlackRock's recent drop being particularly notable.
🔺 Open interest in perpetual futures has surged, increasing risk amid current uncertainty.
📉 Historical data suggests potential continued declines under similar trading conditions.
As the crypto market mulls the aftermath of October’s events, the pressing question remains: Will institutional players return? Until then, volatility seems set to persist.
Forecasting Market Moves
In the coming weeks, there’s a strong chance that Bitcoin will continue to face significant volatility as institutional players remain cautious. Experts estimate around a 70% probability that we will witness further declines if outflows from ETFs persist and leverage remains high. For many traders, the atmosphere reflects a nervous tension similar to previous cycles, where a rebound often requires a clearer signal of stability. Overall, the market’s path forward relies heavily on whether large institutions regain confidence, as their return could provide support that the current market lacks.
Uncommon Lessons from History
A noteworthy parallel can be drawn with the early days of the internet bubble. Just as many tech firms inflated in value during the late 1990s without foundational support, Bitcoin underwent a similar rise driven by speculation rather than practical application. When the bubble burst, many firms suffered prolonged downturns, highlighting how fragile excitement can be once the novelty wears off. Much like then, today’s crypto market seems to echo that trial, suggesting that the path forward may be unpredictable and heavily influenced by psychological factors as much as market fundamentals.