Bitcoin’s Bear Market Triggered by Major Liquidation Event
On October 10, 2025, Bitcoin’s downturn began, marked by what has been described as the largest liquidation event in cryptocurrency history. Around $19 billion in futures contracts were liquidated as prices fell sharply from their previous highs.
According to CryptoQuant contributor Darkfost, the impact wasn’t just directional; it was also structural. He noted that within a single day, open interest dropped by approximately 70,000 BTC, effectively erasing months of built-up leverage. This, he argues, significantly contributed to Bitcoin entering a bear market due, in part, to the rapid decline in liquidity associated with futures trading.
Significance of October 10th in Bitcoin’s Decline
Darkfost observed that the collapse in open interest, measured in BTC, was notable. “We saw about 70,000 BTC vanish from open interest in just one day, taking it back to levels not seen since April 2025,” he explained. “That’s like losing more than six months of activity in one session. Since then, the open interest hasn’t really recovered.”
This situation highlights issues related to the market’s structure following the downturn, rather than just the initial trigger. The event on October 10 wasn’t solely about price fluctuations, according to Darkfost; it marked a sudden decline in the market’s capacity to sustain leverage, which typically results in reduced speculation throughout the overall market.
“The loss of liquidity in an already volatile crypto environment won’t likely spur renewed speculation, even though that’s a key part of the market,” he added.
This perspective aligns with comments from Bitcoin Capital, which remarked that “nothing has changed since October 10,” emphasizing, “It feels like something is broken.” Darkfost’s reply about a potential recovery was clear: “We will need to rebuild, and that might take months.”
In a subsequent update, Darkfost expanded his analysis to include spot trading, which he noted has also cooled down. He mentioned that Bitcoin has experienced a five-month correction and insists that while the October 10 event significantly impacted futures liquidity, it wasn’t the only factor at play.
He raised concerns about liquidity pressures stemming from stablecoin flows and supply. His data indicates that as stablecoin outflows from exchanges surged, the total market capitalization for stablecoins decreased by roughly $10 billion in the same time frame, making risk-taking more challenging, especially in a climate already wary of leverage.
The current state of spot volume also reflects a similar trend of reduced engagement. Since October, BTC spot trading volume has roughly halved, although Binance retains a significant lead at $104 billion in volume. In contrast, in October, Binance’s trading volume was nearly $200 billion compared to Gate.io’s $53 billion and Bybit’s $47 billion.
Darkfost described the contraction as a return to the “lowest levels observed since 2024,” interpreting this as a decrease in demand rather than just a fall-off in activity. He suggested that the prevailing conditions remain uncertain and do not encourage risk-taking. For a sustained recovery, he emphasized the importance of monitoring liquidity and, above all, a rebound in spot trading volumes.
As of now, Bitcoin’s price stands at $78,723.
