Market Volatility and the October 10 Liquidation Event
According to some analysts, the crypto bull cycle may have ended in October 2025 when Bitcoin (BTC) reached its current all-time high price around the $126,000 range. This was followed by a significant liquidity event that liquidated nearly all leverage and long trades in the crypto market. That crash resulted in $20 billion being liquidated in just a few hours. A crash of that magnitude, the analyst declares, will not happen again.
The $20 billion liquidation event not only wiped out all leverage and long trades but also $3 billion in short trades, leading to widespread fear. Furthermore, some altcoin prices plummeted by as much as 90%, prompting assets like Kadena (KDA) to file for bankruptcy. This event led bearish analysts to declare the start of a bear market and predict further altcoin closures in the coming months.
In contrast, other bullish analysts and financial experts suggest that a sharp market collapse similar to the one on October 10 is improbable. Growing optimism surrounding upcoming US crypto legislation, aimed at providing much-needed regulatory clarity to the digital asset sector, points towards a continued bull market, especially if the 5-year supercycle thesis holds true.
The Clarity Act and Its Potential Impact
A reputed analyst explains why another event like the October 10 crash is unlikely to occur again. A primary reason cited is the proposed Clarity Act, which is scheduled for a key vote by the Senate Banking Committee on January 15. This bill is designed to eliminate long-standing regulatory ambiguities that have significantly impacted the crypto market, particularly concerning oversight, compliance, and enforcement.
Supporters of the Clarity Act argue that these uncertainties have contributed to excessive volatility and, in some instances, alleged market manipulation. The October 10 sell-off remains one of the most painful episodes for crypto investors, with billions wiped from market valuations in a matter of hours. While the causes were widely debated, no clear accountability ever emerged, reinforcing concerns about opaque market practices and limited regulatory safeguards.
Bullish Outlook for the 2026 Market
Proponents of the Clarity Act believe that the legislation could significantly reduce risks, thereby making unlikely market dump events in the future less probable. As momentum behind the bill continues to build, the Clarity Act is gaining significant attention. If passed, the bill would return to the House of Representatives for final approval before being sent to President Donald Trump for his signature. The complete legislative process could take between one and two months, potentially positioning the Clarity Act to become law by March 2026.
If enacted, analysts anticipate that the Clarity Act could unlock a new wave of institutional investment, as major financial players gain the regulatory certainty they have long sought. For the crypto industry, the bill represents more than just legislation; it signals a potential shift toward maturity, stability, and deeper integration with the global financial system, thereby reducing the likelihood of sudden, devastating market crashes.