Bitcoin's Crypto Crucible: A $10 Billion Leverage Wipeout Leaves Markets on Edge
Bitcoin finds itself at a critical juncture, having briefly dipped below the psychologically important $100,000 mark. This recent volatility has triggered the deepest leverage wipeout of the current cycle, shedding a staggering $10 billion in leveraged positions and instilling a pervasive sense of caution across the cryptocurrency landscape. As bulls battle to defend crucial support levels, the market waits for signs of stabilization, hoping this painful deleveraging paves the way for a more sustainable rally.
Leverage Flush Deepens Market Caution
According to leading analyst Darkoast, a significant shift is underway beneath Bitcoin's surface, as open interest across major centralized exchanges struggles to recover. Following a massive liquidation event on October 10 that saw over $10 billion in leveraged positions erased within hours, the market has entered an extended period of de-risking. Binance alone experienced a $4 billion decline in Bitcoin open interest, with Bybit and Gate.io seeing drops of over $3 billion and $2 billion, respectively. This widespread contraction marks the largest 30-day decline in open interest of the cycle, indicating a broad move by futures traders to reduce risk. While such aggressive unwinding often precedes healthier price action by flushing out excessive speculation, the current subdued rebound in open interest suggests a market still grappling with fragile confidence.
Bitcoin Tests Key Support Levels Amid Recovery Efforts
Currently trading around $103,000, Bitcoin is attempting a recovery but faces formidable resistance. The 50-day and 100-day moving averages, both converging near the $110,000 mark, are acting as dynamic resistance zones. Below this, the 200-day moving average, positioned around $102,000, serves as a crucial support level. A sustained close beneath this 200-day MA could trigger further downside, potentially pushing Bitcoin towards $95,000. For bulls to regain control and negate the bearish sentiment, reclaiming the $110,000-$112,000 region is paramount. The market's immediate focus remains on whether buyers can hold the $100,000-$103,000 zone, as a failure to do so could ignite another wave of liquidations, further accentuating the cautious sentiment among traders.
