Deck: Bitcoin’s biggest liquidation ever has split the market – is the bull run over or just resetting for another leg up? Here’s a clear-eyed take on both sides.
Introduction
Bitcoin just faced its largest-ever liquidation event — over $19 billion wiped out in under 24 hours. That’s nine times past records and impacted around 1.6 million traders. The shock sent Bitcoin’s market cap swinging by almost $380 billion, a sum larger than every public company outside the top 40 combined. Naturally, investors are divided: some say the bull market has peaked, others believe this was the reset Bitcoin needed. In this article, we’ll unpack both perspectives with data-backed insights and explain the signs to watch that could reshape the market’s next move.
The Bearish Case: Why Some Say the Bull Market is Over
1. Timing Within Bitcoin’s 4-Year Cycle
Bitcoin enthusiasts often look to the 4-year halving cycle to time market tops and bottoms. Historically, bull market peaks line up roughly every four years: late 2017, 2021, and the next predicted peak falls around 2025. The recent $126K price high in October fits this timeline precisely. If this cycle holds true again, it strongly suggests the top may already be in.
2. Long-Term Holder Selling Signals
Data from Glassnode shows long-term Bitcoin holders sold over 3 million BTC this cycle—more than in prior cycles. When veteran holders offload coins into price strength, it usually signals a smart money exit. This trend can be a warning the top is near.
3. Corporate Treasury Quietness and Selling
Corporate treasuries, some of the most committed buyers during bull runs, have largely stopped buying since the crash, with a few selling off Bitcoin holdings. Since these buyers usually show conviction by buying regardless of market swings, their pullback hints at changing market underlying demand.
4. Technical Momentum Weakness
The monthly MACD indicator—a momentum measure—has crossed bearish. Historically, this crossover preceded average drawdowns of about 70% in Bitcoin’s price. Momentum fading this early in the cycle is a concerning technical sign.
5. Altcoin Market Fragmentation and Liquidity Concerns
Thousands of altcoins suffer from fragmented liquidity, with many having high fully diluted valuation (FDV) but low float, meaning supply not yet available on the market. Over $2 billion worth of token unlocks are set for November, which can flood the market and depress prices. Despite Bitcoin’s recovery above 100K, the top 50 altcoin index remains below levels seen even after the FTX collapse, indicating weak capital inflows to altcoins.
Summing Up the Bearish Outlook
- Cycle timing implies top near or passed.
- Long-term holders distributing, signaling profit-taking.
- Corporate treasury buyers retreating or selling.
- Technical indicators pointing to fading momentum.
- Altcoin market liquidity challenges pointing to ongoing weakness.
All these factors combine to form a credible case that the bull market might have already peaked.
The Bullish Case: Why It Could Be a Reset, Not a Reversal
1. Strong Structural Support at Key Averages
Bitcoin still holds around the 50-week moving average, a historically crucial support during bull runs. Past cycles show dips to this level typically act as pauses or resets, not cycle endings.
2. Liquidation Event as Healthy Flush
The record-breaking liquidation wiped out excessive leverage, with funding rates turning negative and open interest collapsing. Clearing out leveraged positions resets the system and removes a key risk — a positive early step before a new upward phase.
3. Liquidity in the System is Building
Global M2 money supply sits near all-time highs at about $137 trillion, up $8 trillion over 6 months. The Federal Reserve is poised to end quantitative tightening in early December, loosening monetary policy.
Additionally, $7.4 trillion is parked in U.S. money market funds ready to chase higher returns. This capital could flow into stocks, crypto, and alternative assets soon.
4. Stablecoin Market Cap Hits All-Time High
Tether, USDC, and other stablecoin reserves hitting new highs show fresh capital is entering crypto markets, an encouraging sign of incoming buying power.
5. Seasonal Strength in Q4 Historically
Bitcoin’s Q4 returns have averaged about 70% over the last 13 years. If seasonality repeats, the coming months could bring significant price appreciation.
6. On-Chain Data Doesn’t Signal Top Yet
Classic top signals—power law bands, MVRV-Z score (market value to realized value ratio), and retail FOMO—haven’t triggered. If this were a cycle top, Bitcoin would be the first to peak without typical euphoria.
7. Macro and Institutional Trends Point Higher
Bitcoin’s price action correlates closely with the ISM business cycle index, currently suggesting a peak in Q2 2026, pointing to more upside potential.
Despite ETF outflows during the crash, large inflows soon followed, consistent with historical local bottoms, not tops.
Corporate treasuries still hold over 1 million BTC (about 5% of supply) and continue to accumulate. The first credit ratings assigned to Bitcoin treasury companies this year show institutional maturation, not market death.
8. Gold-Bitcoin Rotation Pattern
Historically, after gold peaks, capital often rotates quietly into Bitcoin (seen in 2016 and 2020). Gold’s recent run shows signs of topping, signaling a possible catalyst for Bitcoin’s next bull phase.
Summing Up the Bullish Case
- Structural supports intact and leverage flushed.
- Liquidity and stablecoins build ready to fuel demand.
- Seasonality and macro cycles favor higher prices.
- On-chain and institutional behaviors align with maturing market growth.
- Classic top signals remain absent.
This evidence paints a picture of a temporary reset, shaking out weak hands, and priming Bitcoin for further gains.
Key Metrics Callout: Largest Liquidation Ever
- $19 billion in leverage positions liquidated in less than 24 hours.
- That’s 9x previous record and affected 1.6 million traders.
- Bitcoin’s market cap moved by $380 billion in that day, larger than almost all public companies outside the top 40. This event cleared excess leverage and reset funding rates, reducing systemic risk.
Risks / What Could Go Wrong?
- If Bitcoin closes below the 50-week moving average for multiple weeks, it signals technical breakdown.
- Consecutive weekly net ETF outflows across all funds would indicate weakening institutional demand.
- A plateau or decline in stablecoin market cap growth could mean liquidity is drying up.
- Macroeconomic shocks or drastic regulation could derail the rebuilding momentum.
- Prolonged altcoin sell-offs might erode overall crypto market confidence.
Watching these invalidation points is critical.
Actionable Summary: What Investors Should Watch
- Monitor Bitcoin’s 50-week moving average as critical support.
- Track stablecoin market caps for signs of fresh capital inflows.
- Watch ETF flows weekly for institutional commitment shifts.
- Follow on-chain metrics like MVRV-Z and retail FOMO to detect cycle tops or bottoms.
- Keep an eye on macro liquidity trends, including Fed policy changes and money supply data.
Where I Stand and What to Watch Next
I believe the data supports a bitcoin bull market reset, not a full reversal. The market needed a healthy purge, which the recent liquidation provided. Money is flowing into stablecoins, institutions continue to hold sizable Bitcoin treasuries, and the technical structure remains intact for now.
That said, I have clear signs to watch. A multi-week close below the 50-week moving average, continued ETF outflows, and stablecoin contraction would prompt me to reconsider.
For those wanting deeper, real-time insights and tactical entry points during this critical phase, the full Wolfy Wealth PRO playbook offers advanced analysis, risk rules, and model portfolios designed to navigate this evolving cycle.
Frequently Asked Questions
Q1: What caused the $19 billion Bitcoin liquidation?
A: Rapid price drops triggered forced selling of highly leveraged long positions, wiping out about $19 billion in margin in under 24 hours.
Q2: Why does the 50-week moving average matter?
A: Historically, Bitcoin has bounced off the 50-week moving average during bull runs, making it a key support level and cycle reset point.
Q3: What are stablecoins telling us about the market?
A: A rising stablecoin market cap indicates accumulating capital waiting to deploy into crypto assets, suggesting ongoing investor interest.
Q4: How do institutional ETF flows influence Bitcoin prices?
A: ETF inflows often coincide with accumulation phases, while outflows can signal temporary selling, but clusters of outflows have historically marked local bottoms.
Q5: What signs would confirm the bull market is over?
A: Sustained closes below 50-week MA, consecutive ETF outflows, and shrinking stablecoin supply would collectively confirm a bearish shift.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Please do your own research and consider your risk tolerance before investing.
For those seeking expertly curated signals and model portfolios through Bitcoin’s turning points, Wolfy Wealth PRO delivers timely briefs and risk management strategies tailored for every cycle phase. Get the full playbook and smart entries in today’s PRO report.
By Wolfy Wealth - Empowering crypto investors since 2016
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