Bitcoin (BTC) embarks on a pivotal week in October, with the bull market’s future hanging in the balance — what lies ahead?
Bitcoin makes a strong recovery from the largest-ever liquidation event, hitting a peak of $116,000 so far.
Traders are split on the market’s direction from this point — some even question whether the bull market will return.
A significant leverage reset could offer hope for bulls, but short positions remain worrisome.
US inflation data is still pending due to the government shutdown, while Fed Chair Powell is scheduled to speak.
The crypto “debasement trade” gains attention as gold reaches new all-time highs.
“Game over” as Bitcoin and crypto bounce back
Bitcoin successfully returned to $116,000 at the week’s start, with volatility from the weekly close arriving as expected.
This marks a 5.7% recovery compared to Friday’s lows of $109,700, following the biggest liquidity wipeout in crypto history, as confirmed by Cointelegraph Markets Pro and TradingView.
A solitary tariff announcement related to the US-China trade conflict sparked unprecedented panic.
Even stocks and gold were swept into the turmoil — but by Monday, the latter had reached new all-time highs of $4,078 per ounce.
“If you account for the after-hours drop in futures, the S&P 500 is up +120 points at the open,” noted trading resource The Kobeissi Letter in ongoing coverage on X.
“This has effectively erased 50% of the decline seen late last week. Now, we await further guidance from the Trump Admin.”
Crypto added over half a billion dollars to its market cap following Friday’s lows. As some short traders had anticipated the market perfectly, co-founder Adam Kobeissi characterized the rebound as “game over.”
“This was one of the largest and quickest wealth transfers in crypto history,” he remarked.
US President Donald Trump, whose Truth Social message triggered the market crush, supported the recovery similarly.
“Don’t worry about China, everything will be fine!” he stated on Sunday.
In light of recent events, one BTC price chart stands out: volatility. Crypto quant analyst Frank A. Fetter, whose X account is named after a renowned economist, highlighted that implied volatility is at its highest since April — coinciding with the tariff crisis.
“BTC implied volatility just surged: the market is pricing in larger potential movements ahead. Finally,” he informed his X followers.
Fetter seemed to comment on the subdued response to what should be the dramatic year of Bitcoin’s latest bull market. As Cointelegraph reported, worries are surfacing that BTC/USD may not replicate history with a peak in Q4.
Bitcoin bull market depends on vital trendline
Traders face a pivotal decision this week: has the worst passed, or is this just the onset of a significant BTC price correction?
For trader Roman, skeptical of the bull market’s stability, the latter is the clear choice.
“Last week’s flash crash bounced perfectly off our diagonal uptrend support from August 2024 at 40k,” he crowed along with a chart on X.
“I am looking for at least a retest of 108, but as most of you know, HTF has bearish signals. I’ll review the 1D when we get an intra-support retest at 107-108.”
Roman warned that breaking below the diagonal trend line “would ‘officially’ confirm a new macro downtrend and likely validate the bear market.”
In contrast, trader Skew noted more optimistic market narratives, expressing that “large players” were entering as the BTC price surpassed $115,000.
$BTC
It seems that $115K was a crucial trigger for some larger investors too (likely a firm) pic.twitter.com/ta9w5iafia— Skew Δ (@52kskew) October 12, 2025
“Looks pretty good as long as the price doesn’t close below $112K on 1D & next 1W,” he stated regarding the daily and weekly charts, with the bulls’ key obstacle set at $120,000.
Others analyzed exchange order-book liquidity to determine significant price points ahead.
“Respect the liquidation hot spots,” trader SuperBro advised his X followers that day.
“Tradfi might need a chance for a retest of the lows, and there’s liquidity from 108.5 to 113 with concentration near the mid 111’s. The overhead hot spot is from 123-128 with focus around the $126K ATH.”
Analyst: “Exercise caution” after crypto liquidity flush
The aftermath of last week’s liquidity surge has caused an unprecedented reset in the crypto market.
The latest data from on-chain analytics platform Glassnode indicates that funding rates on derivatives exchanges have plummeted to bear-market lows.
“Funding rates across the crypto market have dropped to their lowest levels since the depths of the 2022 bear market,” it announced to its X followers on Sunday.
“This signifies one of the most severe leverage resets in crypto history, a clear indication of how aggressively speculative excess has been purged from the system.”
Open interest (OI) reveals a similar narrative. Between Friday and Sunday, more than $20 billion in assets vanished from exchanges, according to data from CoinGlass, before rebounding from $69 billion to $74 billion.
“We experienced the largest open interest wipeout ever. For BTC specifically, over $10B in open interest was wiped across all major exchanges,” Glassnode co-founder Rafael Schultze-Kraft confirmed on X.
Schultze-Kraft stated that liquidations were “almost certainly larger” due to incomplete reporting from market sources.
“Our BTC Long/Short Bias chart, which tracks the aggregate net positions of the biggest BTC traders on Hyperliquid, showed a sharp increase in net shorts since October 6th, well before Friday’s events,” he explained.
“Although levels have rebounded, they still remain deeply negative. Exercise caution.”
Data gap puts emphasis on Fed’s Powell
Two crucial US inflation indicators may be delayed this week due to the ongoing government shutdown.
The September report on the Producer Price Index (PPI) and initial jobless claims were originally scheduled for release on October 16.
The shutdown shifts focus back to senior Federal Reserve officials who have public speaking engagements in the coming days. Among them is Chair Jerome Powell, slated to speak on “Economic Outlook and Monetary Policy” at the National Association for Business Economics (NABE) Annual Meeting in Philadelphia.
Market participants will scrutinize Powell’s remarks for hints about potential interest-rate cuts — something traders of risk assets are eager to see as a boost for liquidity.
Expectations are nearly unanimous that the Fed will reduce rates by 0.25% at its meeting on October 29, according to data from CME Group’s FedWatch Tool.
Commenting, trading resource Mosaic Asset Company noted there are “deep divisions” among officials regarding the timing and magnitude of future cuts.
“The minutes from the latest rate-setting meeting indicate that the Federal Reserve is maintaining its easing path for now,” it stated in its latest newsletter, “The Market Mosaic.”
“Comments from the Fed reveal deep divisions within the central bank, regarding whether full employment or price stability should take precedence.”
As Cointelegraph reported, labor-market weakness is a prominent concern for the Fed.
All aboard the “debasement trade” express
Despite short-term disruptions, crypto and risk assets may be on the cusp of a much larger uptrend, fueled by changing perceptions toward the US dollar and fiat currencies.
Related: ‘Debasement trade’ will boost Bitcoin, Ethereum DATs will win: Hodler’s Digest, Oct. 5 – 11
Bitcoin’s current bull market has been intertwined with the emergence of the so-called “debasement trade” — a substantial hedge against global currency devaluation.
“Bitcoin began rising to unprecedented levels in 2024, reaching as high as $125,000,” Mosaic Asset Company noted.
“Much like gold leading new highs in precious metals, Bitcoin is spearheading the charge among cryptocurrencies.”
With gold achieving new all-time highs as of Monday, Mosaic highlighted a potential fresh hurdle for risk-asset bulls in the upcoming months: inflation.
“Precious metals and popular cryptocurrencies have gained traction amid concerns about currency devaluation, driven by an expanding global money supply and skyrocketing government debt. A looming wave of inflation may emerge soon,” it cautioned.
Mosaic pointed to the “prices paid” component within the Fed’s recent business surveys, often a leading indicator for inflation trajectories.
“While the rise in prices paid indicators coincides with the onset of the trade war, currency debasement could also be a fundamental driver of future inflation,” it added.
The overall sentiment in the markets this year might amplify any coming surprises in the macroeconomic narrative.
The Kobeissi Letter cited last week’s sharp US-China trade war reaction as a significant illustration of the new market landscape.
“The -$19.5 billion crypto liquidation and -$2.5 trillion equity market crash on October 10th underscored a crucial observation. Markets in 2025 have morphed into their most erratic form in history,” it proclaimed on X.
“When you combine this with unprecedented levels of leverage, a FOMO-driven market, and heavy algorithmic trading participation, volatility is inevitable.”
This article does not provide investment advice or recommendations. All investments and trading decisions carry risks, and readers should conduct their own research.
