The crypto market is currently navigating a
$BTC psychological minefield. Four months ago, on October 10, 2025, the industry witnessed its most severe liquidation event to date. Within a few hours, $19 billion in leveraged positions were wiped out as Bitcoin (
$BTC ) crashed from $122,000 to $105,000.
This "10/10 crash" didn't just break price levels; it broke the market's confidence. Here is a simplified breakdown of why this event is still holding the market back today.
What Triggered the Massacre?
The initial spark was geopolitical. The announcement of a 100% tariff on Chinese imports by President Trump shocked global markets. However, crypto’s unique structure turned a normal correction into a total collapse:
The Leverage Trap: Over 1.6 million trader accounts were liquidated in a single day.The "USDe" Factor: Critics, including OKX CEO Star Xu, pointed to aggressive marketing of USDe—a high-yield synthetic dollar. Users were using USDe as collateral to borrow more funds in a "leverage loop".The Depeg: When volatility hit, USDe lost its peg, triggering a "doom loop" of forced selling that was larger in dollar terms than the FTX collapse.
The Macro Hangover: Japan and Standard Deviations
Why hasn't Bitcoin recovered to its $126,000 highs? The 10/10 event left deep structural scars.
Technical Overselling: Bitcoin is currently trading roughly two standard deviations below its 20-day average—a rare extreme seen only a few times in five years. While this often leads to short-term bounces, the "psychological damage" prevents a full rally.The Yen Carry Trade: A massive $500 billion unwind of the Japanese carry trade added constant selling pressure through January and February 2026.ETF Redemptions: Massive outflows from Bitcoin ETFs followed the crash as retail and institutional confidence wavered.
The Silver Lining: Institutional Foundations
Despite the "textbook capitulation" we've seen, the long-term fundamentals are stronger than ever.
Corporate Treasuries: Public companies (Digital Asset Treasury companies) now hold over 1.1 million BTC (5.7% of total supply), worth roughly $90 billion.Nation-State Adoption: The U.S. Strategic Bitcoin Reserve now holds 325,000 BTC, making it the largest sovereign holder in the world.Institutional Buying: In January 2026 alone, institutions added 43,000 BTC to their portfolios despite the crashing prices.
Bottom Line
The 10/10 crash was "painful medicine." It flushed out billions in dangerous leverage and irresponsible marketing practices. Bitcoin is currently maturing; while institutions still view it as a "risk-on" asset, their continued accumulation at these lower levels suggest the "final stages" of the deleveraging process are near.
Community Engagement:
Do you think the 10/10 crash was a necessary "reset" for the industry, or has it permanently damaged Bitcoin's reputation as a safe-haven asset? Let’s hear your take below! 👇
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