The most intense leverage reset in history and a change of hands among buyers: Can the crypto market rise more easily after the bloodbath?

Described by the crypto community as the “crypto world version of Black Friday,” the flash crash event on October 11 caused the crypto market's market capitalization to evaporate by $450 billion in a single day, marking one of the most intense leverage cleanouts in history. However, on-chain data analysts point to another interpretation: this is not the end of the bull run, but rather a good opportunity to confirm whether the real participants still remain in the market.

( The altcoin season has ended! The crypto market evaporated 450 billion USD in a single day, trader Eugene: goodbye to digital asset reserve companies ).

From the Luna crash to the plunge on 10/11: Has the crypto market grown up?

According to analyst Murphy, the scale and nature of this crash are completely different from the Luna collapse in 2022. Back then, confidence in the crypto world completely collapsed, and investors rushed to exchanges to cash out in panic, with Binance averaging over 50,000 BTC in sales per day that week; it was a cost-irrelevant escape.

Murphy

In contrast to this crash, BTC has actually seen a net outflow, with an average of 5,338 BTC withdrawn from exchanges daily. Murphy pointed out that this indicates that off-chain demand has not decreased as a result, and large investors may still be buying on the dips.

The comparison of net inflows and outflows is very significant, indicating that even during this recent flash crash, large holders, whose theoretical losses are far greater than ordinary retail investors, still choose to continue accumulating BTC rather than cutting their losses and exiting.

For him, this is not the beginning of a bear market, but a correction period where confidence remains.

Glassnode: The most intense “leverage washout” in history

On-chain analysis firm Glassnode described this as “the most severe leverage reset event in history.”

In just a few hours, contract positions worth over $1.91 billion were liquidated, BTC market capitalization evaporated by $380 billion, and the first red K line crossed $20,000 both up and down appeared, quickly welcoming a V-shaped rebound yesterday.

More critically, the funding rate has dropped to its lowest level since the bear market of 2022, with some markets even turning negative. This indicates that short-term leverage is excessively bearish, laying the groundwork for a “short-term rebound ( short squeeze).”

In fact, BTC and ETH have slightly rebounded to the levels before the decline. Glassnode believes that this cleansing, although brutal, is a necessary detox process for the continuation of the bull run.

(ETH returns to 4,100, can the crypto market quickly recover from the liquidation disaster? )

Evan: The buyer structure is no longer what it used to be, and the macroeconomic environment has become the main cause of volatility.

KOL @Evan_ss6 pointed out from the perspective of capital structure that this cycle is dominated by the “spot generation,” including Michael Saylor, Tom Lee, and ETF institutions. Their investment logic, along with that of the investors they attract, is completely different from the past era of retail leverage:

For these people, the market closed on Friday and opened only on Monday, and they didn't even see that long lower shadow.

He believes that altcoins have suffered a severe blow in this wave, but the leverage of mainstream coins has clearly weakened significantly from the perspective of the futures contracts (OI): “The direction of the upcoming market will be more influenced by Trump’s policies and macroeconomic factors, rather than the inherent factors of the crypto field.”

Bloodbath aftermath: a healthier market, a lighter upward movement

From Murphy's past and present comparisons, to Glassnode's on-chain data, and the overlapping thoughts of Evan, the market seems to be conveying a consensus: this flash crash is not the end of the world, but rather a cleansing for the next wave of increase.

Buyer turnover and leverage clearance make the market structure healthier, allowing steadfast holders to navigate the post-bloodbath market more easily.

This article discusses the most intense leverage reset in history and whether the crypto market, after being bloodied, can rise more easily. Originally appeared in Chain News ABMedia.