Bitcoin BTC$68,632.97 is struggling to regain a foothold above $70,000 as altcoins outperform.

The largest cryptocurrency is little changed over 24 hours, while the broader CoinDesk 20 (CD20) index rose 0.40% even as ether ETH$2,009.89 declined. Memecoins are leading gains, with the CoinDesk Memecoin Index (CDMEME) adding 1.5% as PIPPIN climbed 46%.

Tokens linked to artificial intelligence (AI) also fared well. WLD$0.3936, co-founded by OpenAI CEO Sam Altman, rose more than 3% in the past day, while Virtuals’ VIRTUAL token rose 2.4%. That’s as the “agentic AI,” where AI tools now also execute tasks, narrative grows.

Still, the crypto Fear and Greed Index still points to “extreme fear” in the market after last week’s selloff.

Meanwhile, traditional markets steadied, buoyed in part by Prime Minister Sanae Takaichi’s landslide election victory in Japan. While Japanese bond yields rose after the result, they have since fallen near to pre-election levels. That reduces the risk of trillions of dollars invested overseas moving back to Japan in search of higher yields.

Derivatives Positioning

• Bearish momentum in BTC futures is intensifying as open interest (OI) continues its descent to $15.9 bo;;opm, signaling a deep and prolonged deleveraging phase.
• This shift is most evident in funding rates on Binance (-7%) and Bybit (-8%), which have collapsed into aggressive negative territory. That’s a sign short sellers are paying a heavy premium to maintain their dominance. With the three-month basis stagnant at 3%, institutional appetite remains sidelined.
• The BTC options market is showing a cooling of extreme defensive sentiment. The one-week 25-delta skew is at 16%, while call dominance has rebounded to 56%, indicating a shift toward bottom-fishing.
• The implied volatility (IV) term structure is transitioning from extreme backwardation toward a hybrid position that suggests that while near-term protection remains pricey, long-term volatility expectations are stabilizing.
• Coinglass data shows $290 million in 24-hour liquidations, with a 53-47 split between longs and shorts. BTC ($114 million), ETH ($89 million) and others ($16 million) were the leaders in terms of notional liquidations. Binance’s liquidation heatmap indicates $68,160 as a core liquidation level to monitor, in case of a price drop.

Token Talk

• Merkle Trade, the largest perpetual futures decentralized exchange on the Aptos blockchain, is in the throes of shutting down. The exchange disabled new trading positions on Friday and will forcibly close all open positions today.
• Merkle’s native token, MKL, has added 9% in the past 24 hours. It remains redeemable without withdrawal fees, with a final staking rewards payout scheduled for Feb. 12. The token has lost 77% in the past 12 months.
• The move comes less than two years after Merkle raised $2.1 million in a seed round backed by Aptos Labs, Hashed and Arrington Capital.
• Despite processing $30 billion in trading volume since its 2023 debut, the team gave no clear reason for the closure in a post on X last week, noting only that the decision followed “careful consideration.”

Hyperscale Data lifts its Bitcoin treasury to 589 BTC and targets $100m, using a strict dollar‑cost‑averaging plan as crypto remains a macro risk barometer.

Hyperscale Data, Inc. said in a press release published today its Bitcoin treasury reached 589.4502 BTC as of February 8, 2026, with an implied value of roughly $41.4m at a closing Bitcoin price of $70,264. The company reiterated that its goal is to accumulate $100m worth of Bitcoin on its balance sheet over time.

Executive chairman Milton “Todd” Ault III framed the move as deliberate and incremental, stressing discipline over bravado. “We continue to demonstrate our dedication to our dollar‑cost average strategy,” he said, arguing that this approach “has allowed us to continually lower our average cost per Bitcoin and further strengthen the balance sheet and long‑term future of the Company.”

How Hyperscale is accumulating BTC

Through its subsidiaries Sentinum, Inc. and Ault Capital Group, Inc. (ACG), Hyperscale now holds 589.4502 BTC, with Sentinum controlling about 548.5903 BTC and ACG approximately 40.8994 BTC. Sentinum’s stack includes 108.3562 BTC mined in‑house and 440.2341 BTC bought in the open market, while ACG added 8.9000 BTC during the week ended February 8.

The firm plans to “fully deploy the cash allocated to its digital asset treasury (‘DAT’) strategy into Bitcoin purchases over time,” typically targeting at least 5% of allocated cash each week via daily buys, though actual deployment will flex with “market conditions and strategic considerations.” Management told investors to judge accumulation using multi‑week averages, consistent with first‑principles DCA practice common among institutional allocators.

Macro backdrop: crypto as risk gauge

This parabolic move comes as digital assets continue to trade as the purest expression of macro risk appetite. Bitcoin (BTC) is hovering around $69,095, with a recent 24‑hour range between roughly $69,319 and $70,123 and turnover anchored in deep, multi‑billion‑dollar spot and derivatives flows. Ethereum (ETH) changes hands near $2,060, down just over 2% on the session, after trading between about $2,000 and $2,150 over the last day. Solana (SOL) trades close to $83.9, slipping around 0.4% in the past 24 hours as volumes consolidate after a sharp multi‑week advance.

For readers tracking the broader context of Bitcoin’s pullback and volatility, recent analyses from outlets such as Phemex on BTC’s drawdown from its October 2025 highs, Journal du Coin’s coverage of the latest 50% correction, and XTB’s breakdown of the latest slide toward the high‑$60,000 region provide additional color on the forces shaping Hyperscale’s high‑conviction treasury strategy.

As the USD/JPY chart shows, the pair has been exhibiting bearish momentum since the beginning of the week. This move has been driven by a combination of factors:

→ Yen strength on political news. Prime Minister Sanae Takaichi secured a decisive victory in Sunday’s snap election (8 February), winning a parliamentary majority. Although Takaichi has pledged large-scale fiscal stimulus of around ¥21 trillion, the prospect of increased money printing has not weakened the currency, as the market may (a) welcome political stability and (b) believe that the Bank of Japan will be forced to respond to inflation by raising interest rates.

→ US dollar weakness ahead of economic data releases. This reflects market sentiment ahead of labour market data due on Wednesday and the CPI report scheduled for Friday. In addition, the dollar’s status has come under pressure after Chinese regulators reportedly recommended limiting investments in US Treasuries.

On 26 January, when analysing fluctuations in the dollar–yen exchange rate, we:

→ noted that the long-term ascending channel had been broken near the 157.700 level;
→ constructed a parallel channel below and suggested that, following the sharp drop in USD/JPY (triggered by the possibility of coordinated currency intervention by the Bank of Japan and the Federal Reserve), a rebound could occur.

Indeed, since then (as indicated by the arrow):

→ on 28 January, the market formed a low slightly below the lower boundary of the parallel channel;
→ the pair subsequently rebounded towards the 157.700 level.

Technical Analysis of the USD/JPY Chart

The bearish tone of the current week allows us to highlight the following:

→ local support levels of the parallel channel (shown by thick blue lines) have been broken, and bulls may now have to rely on its lower boundary;
→ lower highs A–B–D have formed on the USD/JPY chart, with a bearish trend line drawn through them.

In this context, it is reasonable to assume that:

→ the sharp B→C impulse has disrupted the market’s multi-month bullish structure;
→ the C→D recovery (towards the 78.6% Fibonacci level) was an interim move within a broader bearish reversal.

The ability of the red A–B–D trend line to remain relevant over time would further support this hypothesis.

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Chainlink co-founder Sergey Nazarov says the current market cycle is offering a clearer view of where crypto is headed next – not through price action, but through structural changes taking place beneath the surface.

In a post on X, Nazarov argued that the most important signals this cycle are emerging from infrastructure resilience and real-world adoption rather than speculation.

This suggests the industry is entering a more durable phase.

1. Crypto is surviving volatility with fewer systemic failures

Nazarov’s first signal of progress is the absence of large, cascading institutional collapses during recent market drawdowns. He noted that despite sharp volatility, the industry has avoided the kind of failures that defined the previous cycle.

“This cycle so far has not had the same types of cascading institutional blowups,” Nazarov wrote, pointing to improved risk management and capital discipline across crypto firms.

According to Nazarov, this resilience is a critical prerequisite for long-term institutional participation and signals a maturing market structure.

2. Real-world assets are moving on-chain regardless of prices

The second trend shaping crypto’s next era is the steady migration of real-world assets (RWAs) onto blockchains. Nazarov emphasized that tokenization activity is continuing even as broader crypto markets fluctuate.

“The adoption of RWAs is continuing independent of crypto market cycles,” he said, highlighting on-chain issuance and the growth of perpetual markets tied to traditional assets such as commodities.

He added that features like 24/7 trading, transparent collateral, and global access are driving demand beyond speculative use cases.

3. Infrastructure is becoming the core value proposition

Nazarov’s final trend centers on infrastructure. As RWAs scale, he said the need for reliable data, interoperability, and secure coordination between on-chain and off-chain systems is increasing rapidly.

“In the long run, RWAs can become larger than crypto-native assets,” Nazarov wrote, suggesting blockchains are evolving into foundational financial infrastructure rather than niche markets.

President Donald Trump sparked a viral debate on social media after a February 9 interview on Fox Business’s Kudlow show, where he discussed his decision-making around Kevin Warsh, his nominee for Federal Reserve (Fed) Chair.

Short clips circulating on X (Twitter) show Trump saying he “made a big mistake,” fueling confusion over whether he now regrets nominating Warsh.

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Trump Admits a “Big Mistake”—But Is It About Kevin Warsh or Powell?

In full context, Trump was reflecting on 2017, when he chose Jerome Powell over Warsh, who had been the “runner-up” at the time.

Trump said the decision was influenced by advice from then-Treasury Secretary Steven Mnuchin, calling it a “really big mistake.”

Far from expressing current regret, Trump praised Warsh, describing him as a “high-quality person” capable of delivering extraordinary results if confirmed.

Trump’s comments included an eye-catching claim: if Warsh “does the job that he’s capable of,” the US economy could grow as much as 15%. Notably, this projection is far beyond historical peaks of 4–7% growth in strong years.

This bold statement has sparked widespread debate, with speculation that Warsh will be set up as a “fall guy” if such ambitious expectations are not met.

“…drive economic growth to 15%—a highly optimistic claim that highlights the pressure Warsh would face if confirmed…signal Trump’s push for aggressive stimulus ahead of midterm elections and suggest a challenging path for Warsh,” remarked Walter Bloomberg, a popular market commentator.

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Meanwhile, the remarks also have clear market implications. Analysts and crypto commentators have interpreted Trump’s enthusiasm for Warsh as a signal that the next Fed leadership could favor lower interest rates, stronger liquidity, and pro-growth policies.

“Trump is directly signaling lower rates and stronger liquidity support…This is the clearest signal yet that the next Fed direction could be more growth-focused and liquidity-friendly,” analyst Bull Theory commented.

With a Fed chair who will cut rates and dismiss concerns about inflation, such growth would normally push prices sharply higher.

Posts on X highlight potential implications for Bitcoin, gold, and other risk assets. The general sentiment is that Warsh’s policy approach could lead to easier monetary conditions, reminiscent of “yield curve control” or coordinated Treasury-Fed operations.

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However, misleading captions and out-of-context clips have driven a spike in engagement, with some speculating about alternative nominees like Judy Shelton or questioning whether Warsh could be withdrawn.

However, data on Polymarket shows a modest 3% probability of Trump nominating Shelton, against 95% odds in favor of Warsh.

Fact-check threads and full-clip posts are attempting to clarify that Trump’s “mistake” comment referred to the past, not the present nomination.

Memes, commentary, and speculation about inflation, debt levels, and Fed independence have made the discussion one of the most viral economic topics on X in recent days.

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Warsh himself has a history that blends traditional central banking experience with a measured openness to financial innovation.

A former Fed Governor (2006–2011) and Hoover Institution senior fellow, he is known as an inflation hawk who favors fiscal restraint and a smaller Fed balance sheet.

He has personal exposure to crypto, investing in projects such as Basis and Bitwise, though he views Bitcoin primarily as a store of value rather than a transactional medium.

Sentiment suggests his tenure could indirectly support risk assets by providing macro stability and eventual clarity on rate policies. However, any direct crypto rally is unlikely until he assumes office in May 2026 and policy actions materialize.

Bitcoin has attempted to recover in recent sessions, but upward momentum has stalled as the market waits for a clearer direction. Price remains range-bound after a sharp correction, frustrating short-term traders. 

Despite this pause, historical indicators suggest a bottom may be forming. Past cycles show similar conditions often precede renewed recovery phases.

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Bitcoin Profitable Supply Hits 2022 Level

Bitcoin’s recent decline triggered a signal last seen during the 2022 bear market. The percentage of supply in profit fell to around 50%, meaning half of all circulating BTC is now underwater. This threshold has historically coincided with market bottoms rather than prolonged sell-offs.

When profitable supply compresses to these levels, selling incentives weaken. Holders become less willing to realize losses, reducing sell-side pressure. In previous cycles, this dynamic encouraged investors to hold through volatility, allowing the price to stabilize before recovery resumed.

Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.

Lower prices also attract fresh capital. Value-oriented buyers tend to enter when downside risk appears limited relative to upside potential. This influx of new demand has historically helped revive Bitcoin recoveries once profitable supply falls to or below the 50% mark.

Why Is Bitcoin Likely To Bounce Back?

Macro indicators reinforce the bottoming narrative. The Pi Cycle Top Indicator, which compares the 111-day moving average to a doubled 350-day moving average, remains far from signaling BTC overheating. This indicator historically flags major tops when the shorter average crosses the higher threshold.

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Currently, the opposite setup is unfolding. The shorter moving average is diverging below the longer one, signaling cooling conditions rather than excess speculation. In past cycles, such divergence often preceded sustained rebounds as Bitcoin reset from overheated levels.

This cycle differs from prior ones. Since March 2023, Bitcoin has maintained a macro uptrend without excessive overheating. Gradual price appreciation limited speculative excess, making this the first clear bottom signal in nearly three years rather than a sharp capitulation-driven low.

BTC Price Levels To Watch

In the short term, Bitcoin is holding above the 23.6% Fibonacci retracement near $63,007. At the time of writing, BTC trades around $68,905, maintaining support despite repeated tests. However, price remains capped below the $71,672 resistance, limiting immediate upside.

If on-chain signals continue holding and inflows strengthen, Bitcoin could break above $71,672. Such a move would open the path toward $78,676. Stronger confirmation of recovery would come only if BTC reclaims $85,680 as a sustained support level.

Risks remain on the downside due to the shifting market structure. The short-term holder to long-term holder supply ratio has moved above its upper band. This reflects growing short-term participation, often linked to higher volatility. 

This would hurt Bitcoin’s price chances of crossing the $71,672 barrier, continuing its consolidation. Even if BTC does push past said resistance, the selling will pull it back down towards $63,000, invalidating the bullish thesis.

As the Nvidia (NVDA) share chart shows, during yesterday’s trading session the price advanced towards a key resistance area around $192.50, where notable peaks were formed in December 2025 and January 2026. The move was supported by several factors that boosted optimism:

→ Comments from company management. Nvidia CEO Jensen Huang stated that rising spending on AI is justified and reflects a long-term growth phase for the industry.

→ Goldman Sachs analyst Jim Schneider expects Nvidia’s fourth-quarter revenue to exceed forecasts and surpass $67 billion, and also anticipates strong sales and profit figures in the first quarter of the 2026 financial year.

Technical Analysis of the Nvidia (NVDA) Chart

On the morning of 4 February, when analysing NVDA price movements, we:

→ updated the long-term ascending channel, which remains intact;
→ noted the proximity of its lower boundary, which had acted as a key support level for many months;
→ suggested that NVDA’s price could stabilise in the lower quarter of the channel.

Since then:

→ between 4 and 6 February, the price moved sideways near the lower boundary of the channel, reflecting a balance between supply and demand;
→ following a false break below the December low, the share price staged a sharp rebound, signalling the dominance of buying pressure.

It is reasonable to assume that:

→ the initiative is currently on the side of the bulls, who appear determined to resume the long-term upward trend;
→ if another attempt is made to break through the aforementioned resistance level, it is likely to succeed, opening the way for NVDA shares to move towards the psychological $200 mark.

The realisation of this scenario could be supported by positive sentiment ahead of Nvidia’s earnings release on 25 February and the GTC 2025 conference in mid-March, when new product announcements may be made.

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A federal judge in California sentenced in absentia a dual national of China and St. Kitts and Nevis to 20 years in prison for his role in a $73 million international crypto scam.

Daren Li, who is a fugitive after removing an ankle electronic monitoring device in December, was also handed three years of supervised release for his role in an international cryptocurrency investment conspiracy carried out from scam centers in Cambodia, according to a court statement on Monday.

Cambodia has become a hub for “pig butchering” crypto scams, generating over $30 million daily via forced labor compounds, according to a TRM Labs report. A separate TRM report revealed how over $96 billion in crypto has flowed to Cambodia-linked companies since 2021, used heavily for money laundering and fraud.

“As part of an international cryptocurrency investment scam, Daren Li and his co-conspirators laundered over $73 million dollars stolen from American victims,” Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division said in the statement.

Duva said the court’s criminal division is working with global law enforcement officials to find, detain and return Li to the U.S. to serve his entire sentence.

Li pleaded guilty on Nov. 12, 2024, in the Central District of California to conspiring with others to launder funds obtained from victims through crypto scams and related fraud. As part of his plea agreement, Li said he and his cronies would contact victims directly through unsolicited social-media interactions, telephone calls and messages and online dating services. Their tactics entailed gaining victims’ trust by establishing professional or romantic relationships with them, then luring them into using spoof platforms to appear to invest in crypto.

In other instances, the group posed as tech-support staff and induced victims to send funds via wire transfer or cryptocurrency trading platforms to purportedly remediate a non-existent virus or other false computer-related problem.

Social engineering scams, such as fake investment offers and impersonation tactics, were the leading threat to crypto users, accounting for losses in the billions of dollars and representing nearly 41% of all crypto security incidents in 2025.

The crypto market capitalization has fallen more than 20% year-to-date. In February, investors are divided over whether prices are approaching a local bottom or whether the broader bear market still has room to run.

Amid persistent volatility and growing uncertainty, a key question remains: when is the right time to buy the dip? Analytics platform Santiment has outlined 5 signals to help traders. 

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Are Traders Missing Buy Signals During Market Fear? Santiment Shares 5 Signals

According to Santiment, the first indicator comes from extreme negative social sentiment. By measuring the balance of pessimistic and optimistic language tied directly to specific assets, traders can better filter out noise and identify moments when fear dominates discourse.

Sharp spikes in fear, uncertainty, and doubt (FUD) and pessimistic commentary across social media in past instances have been followed by market rebounds.

“Bottoming out at $60,001 back on Thursday, cryptocurrency’s top market cap asset rebounded a staggering +19% in just under 24 hours following the FUD,” the post read. “When negativity gets high, it’s usually because prices are getting low in a hurry. And once you see the predictions of doom for cryptocurrency, it’s generally the best time to officially buy the dip.”

Another signal comes from tracking mentions of phrases such as “buy”, “buying”, or “bought” in association with the word “dip.” While these mentions increase during sell-offs, Santiment cautions that this metric alone is unreliable. This is because markets can rebound before retail traders fully capitulate.

A more telling sign, according to the platform, is the shift in language from “dip” to more extreme terms like “crash.” When catastrophic language begins to dominate discussions, it suggests fear-driven capitulation. 

Santiment also highlighted the value of monitoring trending bearish keywords. This includes “selling,” “down,” or narratives suggesting assets are “going to $0,” which often emerge when retail confidence breaks.

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The final signal comes from on-chain data, specifically the 30-day Market Value to Realized Value (MVRV) ratio. This metric measures whether recently active wallets are, on average, in profit or at a loss.

When MVRV enters the “strongly undervalued” zone, it indicates that the most recent buyers are underwater. This condition could precede market rebounds.

“As the ‘zone’ graphics indicate, you typically want to avoid being heavily invested in an asset when it is above the ‘Strongly Overvalued Zone.’ But on the flip side, there is great upside to buying while it is below the “Strongly Undervalued Zone.” Santiment added.

The analysis stressed that defining what constitutes a “dip” largely depends on market context and the timeframe a trader is operating on. A short-term move of around 1.7% may present an opportunity for hourly swing traders.

Nonetheless, the platform noted that most market participants tend to react on a weekly basis. This better reflects the realistic trading bandwidth of the average trader.

Rather than relying on intuition or “anecdotal things,” the firm argues that objective data offers clearer insight into when fear-driven sell-offs may be nearing exhaustion.

It is worth noting that buying decisions ultimately depend on individual investor preferences and time horizons. While Santiment’s signals can help identify periods of heightened fear and potential opportunity, they do not guarantee that a market rebound will follow. 

At present, many analysts suggest that the broader bear market may still have room to run. This means that prices could remain under pressure for longer. 

As a result, decisions to buy or hold should be guided by each investor’s risk tolerance, strategy, and opportunity cost considerations.

Billion-dollar liquidation events are no longer rare in crypto markets. While these crashes often appear suddenly, on-chain data, leverage positioning, and technical signals usually reveal stress long before forced selling begins. This article examines whether reconstructing major historical events can help anticipate liquidation cascades.

Keep reading on for early signals and how to read them together. Throughout this piece, we analyze two major events: October 2025 (long liquidation cascade) and April 2025 (short squeeze), and trace the signals that appeared before both. The focus remains primarily on Bitcoin-specific metrics, as it still accounts for nearly 60% (59.21% at press time) of total market dominance.

October 10, 2025 — The Largest Long Liquidation Cascade Came With Signs

On October 10, 2025, more than $19 billion in leveraged positions were taken out, making it the largest liquidation event in crypto history. Although US–China tariff headlines are often cited as the trigger, market data show that structural weakness was around for weeks. The majority of these liquidations were long-biased, almost $17 billion.

Price Extension and Leverage Expansion (Sep 27 → Oct 5)

Between September 27 and October 5, Bitcoin rallied from around $109,000 to above $122,000, eventually testing the $126,000 area. This rapid move strengthened bullish sentiment and encouraged aggressive long positioning.

During the same period, open interest rose from roughly $38 billion to more than $47 billion. Leverage was expanding fast, indicating growing dependence on derivatives.

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Gracy Chen, the CEO of Bitget, said modern market structure makes leverage far more synchronized than in earlier cycles.

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“Positions are built and unwound faster, across more venues… leverage behaves more synchronously… When stress hits, the unwind is sharper, more correlated, and less forgiving,” she added.

At the same time, exchange inflows fell from around 68,000 BTC to near 26,000 BTC. Holders were not selling into strength. Instead, supply stayed off exchanges while leveraged exposure increased.

This combination reflected a late-stage rally structure.

At this stage of the cycle, rising leverage or open interest, for that matter, not only increases trader risk. It also raises balance-sheet and liquidity pressure on exchanges, which must ensure they can process liquidations, withdrawals, and margin calls smoothly during sudden volatility.

When asked how platforms prepare for such periods, Chen, said risk management starts long before volatility erupts:

“Holding a strong BTC reserve is a risk management decision before it’s a market view… prioritize balance-sheet resilience… avoid being forced into reactive moves when volatility spikes…,” she said

Profit-Taking Beneath the Surface (Late Sep → Early Oct)

On-chain profit data showed that distribution had already begun.

From late September into early October, Spent Output Profit Ratio (SOPR), which tracks whether coins are sold at profit or loss, went up from around 1.00 to roughly 1.04, with repeated spikes. This indicated that more coins were being sold at a profit.

Importantly, this happened while exchange inflows remained low. Early buyers (possibly already exchange-held supply) were quietly locking in gains without triggering visible selling pressure. And BTC was already at an all-time high during that time.

This pattern suggests a gradual transfer from early participants to late entrants, often seen near local tops.

Short-Term Holders Flip From Capitulation to Optimism (September 27 → Oct 6)

Short-term holder NUPL (Net Unrealized Profit/Loss), measuring paper profits or losses. provided one of the clearest warning signals. On September 27, STH-NUPL stood near -0.17, reflecting recent capitulation. By October 6, it had surged to around +0.09.

In less than ten days, recent buyers moved from heavy losses to clear profits.

Such rapid transitions are dangerous. After emerging from losses, traders often become highly sensitive to pullbacks and eager to protect small gains, increasing the risk of sudden selling.

As sentiment improved, leverage continued rising. Open interest reached one of its highest levels on record while SOPR and NUPL began rolling over. BTC exchange inflows remained subdued, keeping risk concentrated in derivatives markets.

Instead of reducing exposure, traders increased it. This imbalance made the market structurally weak.

Momentum Weakens Ahead of the Breakdown (July → October)

Technical momentum had been deteriorating for months. From mid-July to early October, Bitcoin formed a clear bearish RSI divergence. Price made higher highs, while the Relative Strength Index, a momentum indicator, made lower highs.

This signaled weakening demand beneath the surface. By early October, the rally was increasingly sustained by leverage rather than organic buying, and the momentum indicator proved it.

Defense Phase and Structural Breakdown (Oct 6 → Oct 9)

After October 6, price momentum faded, and support levels were tested. Despite this, open interest remained elevated, and funding rates, which reflect the cost of holding future positions, stayed positive. Traders were defending positions rather than exiting, possibly by adding margin.

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Chen also mentioned that attempts to defend positions often amplify systemic risks:

“When positions approach liquidation, traders often add margin… Individually, that can make sense. Systemically, it increases fragility… Once those levels fail, the unwind is no longer gradual — it becomes a cascade,” she highlighted as the root cause for massive cascades.

More margin eventually led to a deeper crash.

October 10 — Trigger and Cascade

When tariff-related headlines emerged on October 10, the weak structure collapsed.

Price broke lower, leveraged positions moved into loss, and margin calls accelerated. Open interest fell sharply, and exchange inflows surged.

Forced short selling created a feedback loop, producing the largest liquidation cascade in crypto history.

Stephan Lutz, CEO of BitMEX, said liquidation cycles tend to appear repeatedly during periods of excessive risk-taking, in an exclusive quote to BeInCrypto:

“Normally, liquidations always come with cycles amid greedy times… they are good for market health…,” he mentioned.

Chen cautioned that liquidation data should not be mistaken for the root cause of crashes.

“Liquidations are… an accelerant, not the ignition… They tell you where risk was mispriced… how thin liquidity really was underneath, she said.”

Could This Long Liquidation Cascade Have Been Anticipated?

By early October, several long squeeze warning signs were already visible:

• Rapid price extension from late September
• Open interest near record levels
• Rising SOPR, indicating profit-taking
• STH-NUPL flipping positive in days
• Low exchange inflows concentrate risk in derivatives
• Long-term RSI divergence

Individually, these signals were not decisive. Together, they showed a market that was overleveraged, emotionally unstable, and structurally weak.

Lutz added that recent cascades have also exposed weaknesses in risk management.

“This cycle’s criticism isn’t much on leverage itself, but risk management and the lack of rigorous approach…”

The October 2025 collapse followed a clear sequence:

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Price extension → Open interest expansion → Rising SOPR (selective profit-taking) → Rapid NUPL recovery (short-term optimism) → Long-term RSI divergence (weakening momentum) → Leverage defense through margin → External catalyst → Liquidation cascade

April 23, 2025 — How a Major Short Liquidation Cascade Came With Hints

On April 23, 2025, Bitcoin surged sharply, triggering more than $600 million in short liquidations in a single session. While the rally appeared sudden, on-chain and derivatives data show that a fragile market structure had been forming for weeks after the early-April sell-off.

Early Technical Reversal Without Confirmation (Late Feb → Early April)

Between late February and early April, Bitcoin continued making lower lows. However, on the 12-hour chart, the Relative Strength Index (RSI), a momentum indicator, formed a bullish divergence, with higher lows even as the price declined. This signaled that selling pressure was weakening.

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Despite this, exchange outflows, which measure coins leaving exchanges for storage, continued falling. Outflows dropped from around 348,000 BTC in early March to near 285,000 BTC by April 8.

This showed that dip buyers were hesitant and that accumulation remained limited. The technical reversal was largely ignored.

Bearish Positioning After the April 8 Low (Early → Mid April)

On April 8, Bitcoin formed a local bottom near $76,000. Instead of reducing risk, traders increased bearish exposure. Funding rates turned negative, indicating a strong short bias. At the same time, open interest, the total value of outstanding derivatives contracts, rose toward $4.16 billion (Bybit alone).

This showed that new leverage was being built primarily on the short side. Most traders expected the bounce to fail and prices to move lower.

Exchange outflows continued declining toward 227,000 BTC by mid-April, confirming that spot accumulation remained weak. Both retail and institutional participants stayed bearish.

Selling Exhaustion on Chain (April 8 → April 17)

On-chain data showed that selling pressure was fading.

The Spent Output Profit Ratio (SOPR) was near or below 1 and failed to sustain profit/loss spikes. This indicated that loss-driven selling was slowing, even when buying was not picking pace. That’s a classic bottom sign.

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Short-term holder Net Unrealized Profit/Loss (STH-NUPL), which measures whether recent buyers are in profit or loss, remained in negative territory. It stayed in the capitulation zone with only shallow rebounds, reflecting low confidence and limited optimism.

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Together, these signals showed exhaustion rather than renewed demand.

Compression and Structural Imbalance (Mid April)

By mid-April, Bitcoin entered a narrow trading range. Volatility declined, while open interest remained elevated and funding stayed mostly negative. Shorts were crowded, yet prices failed to break lower and began stabilizing instead.

With selling pressure fading (SOPR stabilizing) but no meaningful spot accumulation emerging (weak outflows), the market became increasingly dependent on derivatives positioning. Buyers remained hesitant, while bearish leverage continued rising against weakening downside momentum. This imbalance made the market structurally unstable.

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April 23 — Trigger and Short Squeeze

By April 22–23, STH-NUPL moved back toward positive territory (shown earlier), showing that recent buyers had returned to small profits. Some holders were now able to sell into strength, while many traders still treated the rebound as temporary and added short exposure.

Notably, a similar NUPL rebound had appeared before the October 2025 long flush. The difference was context. In October, short-term holders turning profitable encouraged more long positioning as traders expected further upside. In April, the same return to small profits encouraged more short positioning, as traders in a corrective market viewed the rebound as temporary and bet on another decline.

This combination tightened liquidity and increased bearish positioning. When prices pushed higher, stop losses were triggered, short covering accelerated, and open interest dropped sharply. Forced buying created a feedback loop, and a positive tariff-related tweet helped, producing one of the largest short liquidation events of 2025.

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The Trump administration is weighing major tariff cuts on Chinese imports—possibly by over 50%—to reduce trade tensions, sources say. No final decision has been made, and options remain open.

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One idea is a tiered system:

🔸 35%…

— *Walter Bloomberg (@DeItaone) April 23, 2025

Could This Short Squeeze Have Been Anticipated?

By mid-April, several warning signs were visible:

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• Bullish RSI divergence from late February
• Persistently negative funding rates
• Rising open interest after the April low
• Weak exchange outflows and limited accumulation
• SOPR stabilizing near 1
• STH-NUPL stuck in capitulation

Individually, these signals appeared inconclusive. Together, they showed a market where shorts were crowded, selling was exhausted, and downside momentum was fading.

The April 2025 squeeze followed a clear sequence:

Momentum divergence → disbelief → short buildup → selling exhaustion (SOPR exhaustion) → price compression → positioning imbalance → short liquidation cascade.

Reflecting on repeated liquidation cycles, Chen said trader behavior remains remarkably consistent.

“Periods of low volatility trigger overconfidence… Liquidity is mistaken for stability… Volatility resets expectations… Each cycle clears excess leverage,” she added.

What These Case Studies Reveal About Future Liquidation Cascade Risk

The October 2025 and April 2025 events show that measurable changes in leverage and on-chain behavior led to the large liquidation cascades. Importantly, these cascades do not occur only at major market tops or bottoms. They form whenever leverage becomes concentrated and spot participation weakens, including during relief rallies and corrective bounces.

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In both cases, these signals emerged 7–20 days before liquidation peaks.

In October 2025, Bitcoin rose from about $109,000 to $126,000 in nine days while open interest expanded from roughly $38 billion to over $47 billion. Exchange inflows fell below 30,000 BTC, SOPR rose above 1.04, and short-term holder NUPL moved from -0.17 to positive within ten days. This reflected rapid leverage growth and rising optimism near a local peak.

In April 2025, Bitcoin bottomed near $76,000 while funding stayed negative and open interest rebuilt toward $4.16 billion. Exchange outflows declined from around 348,000 BTC to near 227,000 BTC. SOPR remained near 1, and STH-NUPL stayed negative until just before the squeeze, showing selling exhaustion alongside growing short exposure.

Despite different market phases, both cascades shared three features. First, open interest increased while spot flows weakened. Second, funding remained strongly one-sided for several days. Third, short-term holder NUPL shifted rapidly shortly before forced liquidations. And finally, if a reversal or a bounce setup surfaces on the technical chart, the liquidation cascade tracking becomes clearer.

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These patterns also appear during mid-trend pullbacks and relief rallies. When leverage expands faster than spot conviction and emotional positioning becomes one-sided, liquidation risk rises regardless of price direction. Tracking open interest, funding, exchange flows, SOPR, and NUPL together provides a consistent framework for identifying these vulnerable zones in real time.