Key Takeaways
- •Bitcoin’s slide toward $100,000 marks its weakest performance since mid-2024.
- •K33 Research points to panic selling and liquidity drain following a record $20 billion liquidation event.
- •Despite fear dominating sentiment, analyst Vetle Lunde sees early signs of a rebound forming.
For traders used to seeing green candles dominate the year, the sudden reversal has revived an old and familiar emotion: fear.
According to K33 Research, this retracement caps off what its analysts call “Rotten October,” a month defined by fading liquidity and lingering anxiety from the biggest market liquidation event in crypto history. Roughly $20 billion in leveraged positions were wiped out in a single day on October 10 — and the aftershocks, it seems, are still rippling across the market.
The Hangover From the Great Liquidation
K33’s Head of Research, Vetle Lunde, describes the current phase as a psychological hangover. “The market isn’t short of cash — it’s short of conviction,” he wrote in a recent note. In his view, fear-driven selling by long-term holders has amplified weakness, pushing Bitcoin into a pattern he calls “hesitation trading” — low volume, choppy moves, and nervous sentiment.
On-chain data backs that up. Over 319,000 BTC that had been held for six months to a year were reactivated in October, a signal that early adopters and patient investors have started taking profits. The flood of supply has collided with thinning demand, driving price pressure even as institutional flows — once tightly tied to Bitcoin’s performance — have lost their short-term influence.
Macro Crosscurrents Add to the Chaos
If that weren’t enough, the broader macro picture hasn’t helped. The Federal Reserve’s 25-basis-point rate cut earlier this month did little to calm investors, overshadowed by worries surrounding the U.S. government shutdown and what comes next for monetary policy.
Against this backdrop, Bitcoin’s correlation with major benchmarks has flipped. While the Nasdaq and S&P 500 rallied 4.8% and 2.3% in October, Bitcoin slid about 4%, marking its weakest monthly relative performance since mid-2024. Even gold — typically a safe-haven competitor — managed to climb 3.7% as digital assets lagged.
Are We Near the Bottom?
Despite the bleak tone, not everyone believes this is the start of a prolonged downtrend. Lunde argues that Bitcoin’s current behavior looks strikingly similar to what happens after large-scale liquidations in previous cycles — long, dull stretches of sideways action that quietly flush out leverage before new rallies begin.
His team’s derivatives regime indicator, which maps today’s structure against historical patterns, shows elements of both capitulation and recovery. In other words, Bitcoin could be carving out a bottom, even if traders don’t feel like it yet.
“Periods like these are slow, heavy, and frustrating,” Lunde explained. “But they’re often the prelude to renewed momentum once selling pressure fades.”
Fear Is Peaking — and That’s Usually Bullish
Market indicators seem to agree that sentiment is near exhaustion. CME futures premiums have dropped to levels not seen since the March 2023 banking crisis, while open interest has fallen to its lowest point since April. K33’s sentiment models show “extreme fear” dominating trader psychology, typically a contrarian sign that sellers are running out of steam.
Lunde maintains a cautiously bullish stance. He’s rotated back into Bitcoin from altcoins, betting that the worst of the selling is behind. “The charts look terrible,” he admitted, “but the fundamentals don’t match a top. We’re still in a liquidity-friendly world with growing institutional access to crypto — not exiting one.”
Why This Might Just Be a Reset
From his perspective, Bitcoin’s recent slide is less about collapse and more about reset — a cooling period after months of speculative heat. He points to broader forces still working in Bitcoin’s favor: expanding monetary policy, the potential for 401(k) crypto access, participation from tier-1 banks, and what he calls a “thawing” regulatory environment in the U.S.
“These aren’t the conditions of a four-year-cycle peak,” Lunde said. “They’re the conditions of a market catching its breath.”
If history is any guide, that breath may not last forever. Previous post-liquidation phases have been followed by powerful recoveries once fear gives way to risk-taking. Whether November’s gloom marks the bottom of this year’s cycle — or just another lull — may depend less on macro data and more on when traders decide to believe again.