Bitcoin traders face heightened uncertainty after more than $19 billion in positions were liquidated over the past weekend, leading to extreme volatility and historic investor hesitation. Rapid price swings now dominate as familiar trading patterns break down.
After these liquidations, both new and experienced investors are on edge as market signals reveal shifting dynamics. Data highlights a major change in short-term whale behavior, while long-term holders continue to show resilience.
Waves of Liquidations Disrupt Market Rhythm
Something feels off in Bitcoin’s pulse. After weeks of muted trading and sudden flash crashes, analysts are warning that the market’s rhythm has fractured. Confidence has drained, leverage has evaporated, and volatility is about to roar back to life.
CryptoQuant CEO Ki Young Ju sounded the alarm on X (Twitter), revealing that paper Bitcoin investors have just gone underwater. These comprise new large investors who have bought and held BTC for a maximum of 155 days.
He clarified that this doesn’t necessarily mean the market will crash or rally, but one thing is certain: “Volatility is coming.”
According to Ju, long-term Bitcoin whales remain profitable, suggesting that short-term traders and leveraged speculators are driving the turbulence ahead.
It’s a dynamic reminiscent of early 2022, when derivatives-heavy traders dominated order books and spot demand thinned out.
That imbalance could now be resetting. The implication is that while short-term traders bleed, deep-pocketed holders are still steering the market from a position of strength.
A Historic Crisis of Confidence
Market analyst Murphy Chen has identified what may be the most telling signal of all, a crisis of conviction. His Investor Confidence Index has remained stuck in the “hesitation zone” for 49 days straight, the longest stretch in its recorded history.
“In past data, it would stay there for as short as one week or as long as one month before a clear direction emerged…But this time, it has been exactly 49 days since August 27. This is absolutely unprecedented,” Chen explained.
Chen argues that the market hasn’t entered a panic phase, nor is it in euphoria. Instead, it’s trapped between both. This psychological standoff, where traders can’t agree on whether Bitcoin’s bull run that began in April is ending or merely pausing, is ending or simply pausing.
Against this backdrop, Chen urges traders to reduce exposure, stay patient, and keep cash ready.
“At this position, it’s hard for us to make money from a highly certain major trend,” he said. “The foundation of the bull market is still intact, but visibility is poor.”
Split Sentiment: Fear, Resets, and Quiet Optimism
The October 11 crash, which triggered $19 billion in liquidations, has deepened this divide. Trader Garrett, known for his bearish calls, said on X that the recent price rebound was largely driven by excessive long leverage.
He believes the crash was a reality check that wiped out most leveraged players, adding that until exchanges create stabilization funds, a sustainable upturn is unlikely.
Others, however, see the opposite. Analyst Phyrex called the recent liquidation wave “a necessary cleansing” that could ultimately make the market healthier.
“This volatility exposed and addressed potential systemic issues in exchanges, including Binance…It facilitated a new round of deleveraging across the entire market,” he said.
He pointed out that open interest in Bitcoin and Ethereum has fallen sharply, by around 30% in ETH’s case, suggesting that speculative excess has been flushed out.
“Structurally, BTC and ETH are still oscillating at high levels. Once the market completes this deleveraging process, prices tend to stabilize and are more likely to trend upward,” Phyrex added.
Meanwhile, other traders are pulling back altogether. Influencer James Crypto Guru revealed closing out positions on Bitcoin trades and some altcoins.
“Something is wrong. I think we’re going to retest supports,” James stated.
Adding to the confusion, crypto commentator AB Kuai Dong reported that Galaxy, a major OTC trading desk, deleted and revised its analysis of the October 11 crash, the first time in two years it had ever done so.
The Bitcoin market has long thrived on cycles of speculation, liquidation, and renewal. But this time, even seasoned traders say something feels different. It is as if the usual beat of risk and reward has lost sync.
