Bitcoin (BTC) begins a crucial week of October with the fortunes of the bull market on the line. What happens next?
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Bitcoin has made a solid rebound from the largest liquidation cascade in history, reaching an all-time high of $116,000.
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Traders are divided on where the market will go from here, with some questioning whether the bull market will even return.
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A significant reset of leverage provides potential relief for bulls, but short sellers remain a concern.
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US inflation data continues to be delayed by the government shutdown as Fed Chairman Jerome Powell is scheduled to speak.
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As gold hits a new all-time high, virtual currency “downgrade transactions” are attracting attention.
“Game over” with Bitcoin and virtual currency rebound
Bitcoin managed to recover to $116,000 at the beginning of the week as weekly closing price volatility arrived quickly.
This represents a 5.7% rebound from Friday’s low of $109,700, which was the biggest liquidity wipeout in crypto market history, data from Cointelegraph Market Pro and TradingView confirms.
A single tariff announcement as part of the US-China trade war caused unprecedented panic.
Stocks and gold also joined in the turmoil, but by Monday the latter had already hit a new all-time high of $4,078 an ounce.
“Including the after-hours futures decline, the S&P 500 index is up +120 points on the move,” trading source Kovisi Letter noted in its continued coverage of X.
“This effectively eliminates 50% of the decline seen late last week. We are now awaiting further guidance from the Trump administration.”
Meanwhile, the cryptocurrency added more than $500 million in market capitalization after Friday’s low. Co-founder Adam Kobisi described the comeback as “game over,” given that some short traders had timed the market a bit too much.
“This was one of the largest and fastest wealth transfers in crypto history,” he said.
U.S. President Donald Trump’s message on Truth Social triggered his defeat and similarly helped him recover.
“Don’t worry about China, everything will be fine!” he wrote on Sunday.
As a result of the events of the past few days, one thing stands out on the BTC price chart. That’s volatility. As crypto quantitative analyst Frank A. Fetter pointed out, the X account is named after a famous economist, and implied volatility is currently at its highest level since April, at the height of the tariff controversy.
“BTC’s implied volatility has just spiked. The market is now pricing in the possibility of even bigger moves ahead. Finally,” he told his X followers.
Fetter appeared to be referring to the lackluster year that was supposed to be the culmination of Bitcoin’s latest bull market. As reported by Cointelegraph, there are growing concerns that BTC/USD will not repeat its history of blowing up in Q4.
Bitcoin bull market depends on key trend lines
Traders are facing a dilemma this week. Is the worst over, or is a major correction in BTC price just beginning?
For Roman, a trader who has long doubted the strength of the bull market, the choice is clearly the latter.
“Last week’s flash crash bounced perfectly off the support of the oblique uptrend from 40k in August 2024,” he wrote in parallel with X’s chart.
“We are looking for a retest of at least 108, but as many know, there are bearish signs in HTF. If we get a retest within support at 107-108, we plan to check 1D.”
Roman added that a break below the diagonal trend line would “officially” confirm a new macro downtrend and likely confirm a bear market.
Trader Skew offered a more hopeful view of the market, saying he sees “major players” entering the market as BTC prices recover to $115,000.
$BTC
It appears that $115,000 was a significant trigger for some major companies (and perhaps even corporations). pic.twitter.com/ta9w5iafia— Skew Δ (@52kskew) October 12, 2025
“As long as the price stays below $112,000 on 1D and then 1W, it looks pretty okay,” he said of the daily and weekly charts, placing the main challenge for the bulls at $120,000.
Others have used liquidity in exchange order books to identify key upcoming price levels.
“Please respect the liquidation hotspots,” trader Superbro told his X followers that day.
“Tradfi may need a chance to retest the lows. Liquidity ranges from 108.5 to 113 and is concentrated around the mid-111s. Hotspot overhead is 123 to 128 and ATH is concentrated around $126,000.”
Analyst: “Continue to be cautious” after cryptocurrency liquidity flush
Last week’s liquidity cascade shock caused the cryptocurrency market to reset on a record scale.
Latest market data from on-chain analytics platform Glassnode reveals that funding rates across derivatives exchanges have plummeted to bear market lows.
“Funding rates across the crypto market have fallen to their lowest levels since the depths of the bear market in 2022,” he told X Followers on Sunday.
“This is one of the most severe deleveraging resets in crypto history and clearly demonstrates how aggressively speculative excess has been purged from the system.”
Open Interest (OI) tells a similar story. More than $20 billion in assets disappeared from exchanges between Friday and Sunday, before recovering to $74 billion from $69 billion, according to CoinGlass data.
“We saw the largest open interest elimination in history. BTC alone saw over $10 billion of open interest eliminated across all major exchanges,” Glassnode co-founder Rafael Schulze-Kraft confirmed on X.
Schulzekraft said the liquidation amount was “almost certainly higher” due to incomplete reporting by market participants.
“Our BTC long/short bias chart, which tracks the total net positions of the largest BTC traders on HyperLiquid, showed a sharp increase in net shorts from October 6th, well before Friday’s event,” he added.
“Although the level has since recovered, it remains seriously negative. Please continue to pay close attention.”
Lack of data puts Fed’s Powell in the spotlight
Two major U.S. inflation gauges may have to wait this week as the government shutdown continues.
The September Producer Price Index (PPI) and new unemployment insurance claims were originally scheduled to be released on October 16th.
The shutdown has refocused attention elsewhere, particularly on top Federal Reserve officials who are scheduled to speak in the coming days. They include Chairman Jerome Powell, who will speak on “Economic Outlook and Monetary Policy” at the National Association for Business Economics (NABE) annual meeting in Philadelphia.
While markets are watching Powell’s comments for confirmation of future rate cuts, risk asset traders are hoping for a liquidity tailwind.
There is near consensus that the Fed will cut interest rates by 0.25% at its Oct. 29 meeting, according to data from CME Group’s FedWatch tool.
Trading resource Mosaic Asset Company commented that there is “deep disagreement” among officials regarding the timing and extent of future cuts.
“Minutes from the latest rate-setting meeting indicate the Fed remains accommodative for now,” he said in the latest edition of his regular newsletter, The Market Mosaic.
“The Fed’s comments demonstrate deep divisions within the central bank and whether its commitment to full employment or price stability is more important.”
As Cointelegraph reported, labor market weakness is a particular priority for the Fed.
Everyone board the “Depraved Trade” train
Amid short-term turmoil, crypto and risk assets could be at the beginning of an even bigger uptrend thanks to changing attitudes towards the US dollar and fiat currencies.
Related: Bitcoin soars due to “downgrade trade,” Ethereum DAT wins: Hodler’s Digest, October 5-11
Bitcoin’s recent bull run has been accompanied by the rise of so-called “down trading,” a huge hedge against global currency devaluations.
“Bitcoin begins its run towards record highs in 2024, with Bitcoin rising to $125,000,” Mosaic Asset Company wrote.
“Just as gold sets new all-time highs for precious metals, Bitcoin leads among cryptocurrencies.”
With gold prices hitting new highs as of Monday, Mosaic turned to inflation, which could pose a new challenge for risk asset bulls in the coming months.
“Precious metals and popular cryptocurrencies are fueling fears of currency depreciation as global money supply increases and government debt levels soar. Another sign of currency depreciation could be a wave of inflation in the coming months.”
Mosaic pointed to the “price paid” component of the Fed’s recent business survey, which he said is often a leading indicator of inflation trends.
“While the rise in the price paid index coincides with the start of a trade war, currency depreciation could also be an underlying driver of inflation,” it added.
The overall nature of this year’s markets could exacerbate future surprises in the macroeconomic story.
The Kobeisi letter cited last week’s immediate response to the US-China trade war as a prime example of the new reality.
“The $19.5 billion cryptocurrency liquidation and $2.5 trillion stock market crash on October 10 highlighted an important point: the market in 2025 is evolving into the most reactionary form in history,” he wrote on X.
“Add to this record levels of leverage, FOMO-inducing markets, and massive participation of algorithmic traders, and the situation becomes violent.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should conduct their own research when making decisions.