On October 10, 2025, the cryptocurrency market suffered a sharp drop that resulted in nearly $19 billion in liquidations. A few days after an all-time high above $126,000, bitcoin quickly lost part of its value. A year later, traders have better tools to monitor risk. However, leverage, excessive positions and the weight of derivatives continue to weaken the market.
In brief
- The crypto crash of October 10, 2025 caused nearly $19 billion in liquidations.
- Bitcoin fell from $122,000 to $105,000 in a matter of minutes.
- Leverage and excessive long positions have amplified market risks.
- Traders have better tools to monitor open positions and funding rates.
- A year after the crash, derivatives continue to threaten the stability of the crypto market.
Bitcoin confronted with the memory of the October 2025 crash
On October 10, 2025, the market experienced one of its most violent episodes. After surpassing $126,000, bitcoin saw its price drop from around $122,000 to $105,000. Most of this drop occurred in a matter of minutes. This rapid fall surprised many investors who were still expecting prices to rise.
The collapse caused around $19 billion in liquidations in cryptocurrency markets. These liquidations affected traders who had taken large positions using leverage. Their bets were based in particular on the continuation of the rise and on historical market cycles. When prices turned, these positions suffered rapid losses.
For Mark Connors of Risk Dimensions, the scale of the movement surprised market players. This former head of a hedge fund positioning product at Credit Suisse underlines the weight of traders’ positioning.
It was a very quick and sharp market top that we didn’t expect, positioning was important then, and it still is today.
Mark Connors of Risk Dimensions. Source: CoinDesk.
According to him, investors had accumulated significant long positions before the fall. This concentration of bets increased their exposure when the market suddenly changed direction.
Leverage remains at the heart of market risks
Before the crash, open interest was near historic highs. This indicator measures the number of derivative contracts still outstanding on a market. At the same time, many traders anticipated a further rise in bitcoin. Some were even considering targets of $250,000 to $400,000, building on previous cycles.
However, the fall showed the limits of these expectations. Connors believes that “ the movement mainly came from derivatives rather than blockchain data “. In other words, price variations can result from financial positions taken on the asset, without directly reflecting actual demand. This distinction remains essential for understanding rapid market movements.
Perpetual futures illustrate this dynamic. They allow traders to speculate on price variations without directly holding the cryptocurrencies in question. These instruments retain an important place in exchanges, while the platforms have financial reasons to continue to offer products with leverage. Consequently, the same mechanisms likely to amplify an increase can also accelerate a decline.
More accurate monitoring tools for traders
Since October 2025, market participants have had more information to assess their exposure. Connors particularly highlights progress in the analysis of order books and positioning. This data helps traders better understand market structure. However, they do not make it possible to predict with certainty the next price movement.
Chris Sullivan, co-founder of Hyperion Decimus, recommends limiting the use of leverage first. He also advises tracking open positions, funding rates, and general market sentiment. These indicators can reveal an excessive accumulation of bets in the same direction. Their combination thus makes it possible to identify certain situations where the market becomes more vulnerable.
Funding rates deserve special attention in perpetual contract markets. They reflect the cost associated with holding certain positions and provide guidance on trading conditions. For their part, open positions provide information on the extent of commitments still active. When these measures reach extreme levels, Sullivan advocates patience rather than hasty decisions, whether traders anticipate a rise or a fall.
Bitcoin holders must also protect their assets
The lessons of the crash also concern investors who wish to hold their assets for a long period. Sullivan recommends that they buy their bitcoins, then transfer them off the exchanges to a safe place for storage. This approach limits their direct exposure to the risks associated with maintaining funds on a trading platform. It also distinguishes the holding of the asset from speculation on its short-term variations.
This caution does not mean that investors can eliminate all risks. Rapid price movements remain possible, even as traders monitor their positions more closely. Connors points out that leveraged products are still present in the market. A new episode comparable to that of October 10, 2025 therefore remains possible, despite the progress made in data analysis.
The increased visibility nevertheless constitutes a notable change since the previous crash. Traders can better spot certain imbalances and measure their exposure before making decisions. However, the existence of better tools does not guarantee a fast enough response or complete protection against losses. Risk management therefore remains a central element for investors who operate in derivatives markets.
The four-year cycle called into question after the fall
The crash also weakened another market belief: the ability of the four-year cycle to guide price expectations. This cycle is based in particular on the periodic reduction of rewards granted to minors. Before October 2025, some investors believed that this mechanism could herald new highs. The violence of the fall, however, showed that this reference was not enough to explain market movements.
Connors believes that the four-year cycle has not disappeared, but has evolved:
The four-year cycle is not dead; it has changed, and we can no longer rely on it as much as before.
Mark Connors of Risk Dimensions. Source: CoinDesk.
According to him, investors can no longer rely on this model with the same confidence as before. Economic and political factors may now play a greater role in bitcoin’s fluctuations. This development complicates forecasts based solely on historical trends.
Furthermore, the development of institutional investment products has not eliminated the influence of derivative products on short-term prices. The arrival of new players therefore does not prevent speculative positions from causing rapid movements. A year after the crash, Connors nevertheless believes that investors are paying more attention to market structure. This realization represents one of the main lessons of the episode.
As the first anniversary of the crash of October 10, 2025 approaches, the market thus retains better knowledge of its mechanisms, without having eliminated its main sources of fragility. Future developments will depend in particular on the positioning of traders, the use of leverage and the weight of derivative products. For BTC, the ability of investors to manage these risks will remain decisive. The market resisted this fall, but there is no guarantee that a future shock will produce the same consequences.
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