Bitcoin’s Most Dangerous Setups Formed Days Before October 10 Crash: How to Spot it Next Time
Billion-dollar liquidation occasions are now not uncommon in crypto markets. While these crashes typically seem immediately, on-chain knowledge, leverage positioning, and technical alerts often reveal stress lengthy earlier than pressured promoting begins. This article examines whether or not reconstructing main historic occasions might help anticipate liquidation cascades.
Keep studying on for early alerts and the way to learn them collectively. Throughout this piece, we analyze two main occasions: October 2025 (lengthy liquidation cascade) and April 2025 (quick squeeze), and hint the alerts that appeared earlier than each. The focus stays totally on Bitcoin-specific metrics, as it nonetheless accounts for almost 60% (59.21% at press time) of whole market dominance.
October 10, 2025 — The Largest Long Liquidation Cascade Came With Signs
On October 10, 2025, greater than $19 billion in leveraged positions have been taken out, making it the most important liquidation occasion in crypto historical past. Although US–China tariff headlines are sometimes cited because the set off, market knowledge present that structural weak point was round for weeks. The majority of those liquidations have been long-biased, nearly $17 billion.
Price Extension and Leverage Expansion (Sep 27 → Oct 5)
Between September 27 and October 5, Bitcoin rallied from round $109,000 to above $122,000, ultimately testing the $126,000 space. This speedy transfer strengthened bullish sentiment and inspired aggressive lengthy positioning.
During the identical interval, open curiosity rose from roughly $38 billion to greater than $47 billion. Leverage was increasing quick, indicating rising dependence on derivatives.
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Gracy Chen, the CEO of Bitget, stated fashionable market construction makes leverage way more synchronized than in earlier cycles.
“Positions are constructed and unwound quicker, throughout extra venues… leverage behaves extra synchronously… When stress hits, the unwind is sharper, extra correlated, and fewer forgiving,” she added.
At the identical time, change inflows fell from round 68,000 BTC to close to 26,000 BTC. Holders weren’t promoting into energy. Instead, provide stayed off exchanges whereas leveraged publicity elevated.
This mixture mirrored a late-stage rally construction.
At this stage of the cycle, rising leverage or open curiosity, for that matter, not solely will increase dealer danger. It additionally raises balance-sheet and liquidity stress on exchanges, which should guarantee they’ll (*10*), withdrawals, and margin calls easily throughout sudden volatility.
When requested how platforms put together for such intervals, Chen, stated danger administration begins lengthy earlier than volatility erupts:
“Holding a robust BTC reserve is a danger administration resolution earlier than it’s a market view… prioritize balance-sheet resilience… keep away from being pressured into reactive strikes when volatility spikes…,” she stated
Profit-Taking Beneath the Surface (Late Sep → Early Oct)
On-chain revenue knowledge confirmed that distribution had already begun.
From late September into early October, Spent Output Profit Ratio (SOPR), which tracks whether or not cash are bought at revenue or loss, went up from round 1.00 to roughly 1.04, with repeated spikes. This indicated that extra cash have been being bought at a revenue.
Importantly, this occurred whereas change inflows remained low. Early consumers (probably already exchange-held provide) have been quietly locking in good points with out triggering seen promoting stress. And BTC was already at an all-time high throughout that point.
This sample suggests a gradual switch from early members to late entrants, typically seen close to native tops.
Short-Term Holders Flip From Capitulation to Optimism (September 27 → Oct 6)
Short-term holder NUPL (Net Unrealized Profit/Loss), measuring paper income or losses. offered one of many clearest warning alerts. On September 27, STH-NUPL stood close to -0.17, reflecting latest capitulation. By October 6, it had surged to round +0.09.
In lower than ten days, latest consumers moved from heavy losses to clear income.
Such speedy transitions are harmful. After rising from losses, merchants typically turn out to be extremely delicate to pullbacks and keen to defend small good points, growing the danger of sudden promoting.
As sentiment improved, leverage continued rising. Open curiosity reached certainly one of its highest ranges on report whereas SOPR and NUPL started rolling over. BTC exchange inflows remained subdued, preserving danger concentrated in derivatives markets.
Instead of decreasing publicity, merchants elevated 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 fashioned a transparent bearish RSI divergence. Price made increased highs, whereas the Relative Strength Index, a momentum indicator, made decrease highs.
This signaled weakening demand beneath the floor. By early October, the rally was more and more sustained by leverage somewhat than natural shopping for, and the momentum indicator proved it.
Defense Phase and Structural Breakdown (Oct 6 → Oct 9)
After October 6, value momentum pale, and help ranges have been examined. Despite this, open curiosity remained elevated, and funding charges, which mirror the price of holding future positions, stayed constructive. Traders have been defending positions somewhat than exiting, probably by including margin.
Chen additionally talked about that makes an attempt to defend positions typically amplify systemic dangers:
“When positions method liquidation, merchants typically add margin… Individually, that may make sense. Systemically, it will increase fragility… Once these ranges fail, the unwind is now not gradual — it turns into a cascade,” she highlighted as the foundation trigger for large cascades.
More margin ultimately led to a deeper crash.
October 10 — Trigger and Cascade
When tariff-related headlines emerged on October 10, the weak construction collapsed.
Price broke decrease, leveraged positions moved into loss, and margin calls accelerated. Open curiosity fell sharply, and change inflows surged.
Forced quick promoting created a suggestions loop, producing the largest liquidation cascade in crypto historical past.
Stephan Lutz, CEO of BitMEX, stated liquidation cycles have a tendency to seem repeatedly during times of extreme risk-taking, in an unique quote to BeInCrypto:
“Normally, liquidations at all times include cycles amid grasping occasions… they’re good for market well being…,” he talked about.
Chen cautioned that liquidation knowledge shouldn’t be mistaken for the foundation explanation for crashes.
“Liquidations are… an accelerant, not the ignition… They let you know the place danger was mispriced… how skinny liquidity actually was beneath, she stated.”
Could This Long Liquidation Cascade Have Been Anticipated?
By early October, a number of lengthy squeeze warning indicators have been already seen:
- Rapid value extension from late September
- Open curiosity close to report ranges
- Rising SOPR, indicating profit-taking
- STH-NUPL flipping constructive in days
- Low change inflows focus danger in derivatives
- Long-term RSI divergence
Individually, these alerts weren’t decisive. Together, they confirmed a market that was overleveraged, emotionally unstable, and structurally weak.
Lutz added that latest cascades have additionally uncovered weaknesses in danger administration.
“This cycle’s criticism isn’t a lot on leverage itself, however danger administration and the shortage of rigorous method…”
The October 2025 collapse adopted a transparent sequence:
Price extension → Open curiosity growth → Rising SOPR (selective profit-taking) → Rapid NUPL restoration (short-term optimism) → Long-term RSI divergence (weakening momentum) → Leverage protection by means of 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 greater than $600 million briefly liquidations in a single session. While the rally appeared sudden, on-chain and derivatives knowledge present {that a} fragile market construction 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 decrease lows. However, on the 12-hour chart, the Relative Strength Index (RSI), a momentum indicator, fashioned a bullish divergence, with increased lows whilst the worth declined. This signaled that promoting stress was weakening.
Despite this, change outflows, which measure cash leaving exchanges for storage, continued falling. Outflows dropped from round 348,000 BTC in early March to close to 285,000 BTC by April 8.
This confirmed that dip consumers have been hesitant and that accumulation remained restricted. The technical reversal was largely ignored.
Bearish Positioning After the April 8 Low (Early → Mid April)
On April 8, Bitcoin fashioned a neighborhood backside close to $76,000. Instead of decreasing danger, merchants elevated bearish publicity. Funding charges turned unfavourable, indicating a robust quick bias. At the identical time, open curiosity, the overall worth of excellent derivatives contracts, rose towards $4.16 billion (Bybit alone).
This confirmed that new leverage was being constructed totally on the quick aspect. Most merchants anticipated the bounce to fail and costs to transfer decrease.
Exchange outflows continued declining towards 227,000 BTC by mid-April, confirming that spot accumulation remained weak. Both retail and institutional members stayed bearish.
Selling Exhaustion on Chain (April 8 → April 17)
On-chain knowledge confirmed that promoting stress was fading.
The Spent Output Profit Ratio (SOPR) was close to or under 1 and failed to maintain revenue/loss spikes. This indicated that loss-driven promoting was slowing, even when shopping for was not choosing tempo. That’s a traditional backside signal.
Short-term holder Net Unrealized Profit/Loss (STH-NUPL), which measures whether or not latest consumers are in revenue or loss, remained in unfavourable territory. It stayed within the capitulation zone with solely shallow rebounds, reflecting low confidence and restricted optimism.
Together, these alerts confirmed exhaustion somewhat than renewed demand.
Compression and Structural Imbalance (Mid April)
By mid-April, Bitcoin entered a slim buying and selling vary. Volatility declined, whereas open curiosity remained elevated and funding stayed largely unfavourable. Shorts were crowded, but costs failed to break decrease and started stabilizing as an alternative.
With promoting stress fading (SOPR stabilizing) however no significant spot accumulation rising (weak outflows), the market grew to become more and more depending on derivatives positioning. Buyers remained hesitant, whereas bearish leverage continued rising in opposition to weakening draw back momentum. This imbalance made the market structurally unstable.
April 23 — Trigger and Short Squeeze
By April 22–23, STH-NUPL moved again towards constructive territory (proven earlier), displaying that latest consumers had returned to small income. Some holders have been now ready to promote into energy, whereas many merchants nonetheless handled the rebound as short-term and added quick publicity.
Notably, the same NUPL rebound had appeared earlier than the October 2025 lengthy flush. The distinction was context. In October, short-term holders turning worthwhile inspired extra lengthy positioning as merchants anticipated additional upside. In April, the identical return to small income inspired extra quick positioning, as merchants in a corrective market considered the rebound as short-term and wager on one other decline.
This mixture tightened liquidity and elevated bearish positioning. When costs pushed increased, cease losses have been triggered, quick overlaying accelerated, and open curiosity dropped sharply. Forced shopping for created a suggestions loop, and a constructive tariff-related tweet helped, producing one of many largest quick liquidation occasions of 2025.
Could This Short Squeeze Have Been Anticipated?
By mid-April, a number of warning indicators have been seen:
- Bullish RSI divergence from late February
- Persistently unfavourable funding charges
- Rising open curiosity after the April low
- Weak change outflows and restricted accumulation
- SOPR stabilizing close to 1
- STH-NUPL caught in capitulation
Individually, these alerts appeared inconclusive. Together, they confirmed a market the place shorts have been crowded, promoting was exhausted, and draw back momentum was fading.
The April 2025 squeeze adopted a transparent sequence:
Momentum divergence → disbelief → quick buildup → promoting exhaustion (SOPR exhaustion) → value compression → positioning imbalance → quick liquidation cascade.
Reflecting on repeated liquidation cycles, Chen stated dealer conduct stays remarkably constant.
“Periods of low volatility set off overconfidence… Liquidity is mistaken for stability… Volatility resets expectations… Each cycle clears extra leverage,” she added.
What These Case Studies Reveal About Future Liquidation Cascade Risk
The October 2025 and April 2025 occasions present that measurable modifications in leverage and on-chain conduct led to the massive liquidation cascades. Importantly, these cascades don’t happen solely at main market tops or bottoms. They type each time leverage turns into concentrated and spot participation weakens, together with throughout reduction rallies and corrective bounces.
In each circumstances, these alerts emerged 7–20 days earlier than liquidation peaks.
In October 2025, Bitcoin rose from about $109,000 to $126,000 in 9 days whereas open curiosity expanded from roughly $38 billion to over $47 billion. Exchange inflows fell under 30,000 BTC, SOPR rose above 1.04, and short-term holder NUPL moved from -0.17 to constructive inside ten days. This mirrored speedy leverage development and rising optimism close to a neighborhood peak.
In April 2025, Bitcoin bottomed close to $76,000 whereas funding stayed negative and open curiosity rebuilt towards $4.16 billion. Exchange outflows declined from round 348,000 BTC to close to 227,000 BTC. SOPR remained close to 1, and STH-NUPL stayed unfavourable till simply earlier than the squeeze, displaying promoting exhaustion alongside rising quick publicity.
Despite totally different market phases, each cascades shared three options. First, open curiosity elevated whereas spot flows weakened. Second, funding remained strongly one-sided for a number of days. Third, short-term holder NUPL shifted quickly shortly earlier than pressured liquidations. And lastly, if a reversal or a bounce setup surfaces on the technical chart, the liquidation cascade monitoring turns into clearer.
These patterns additionally seem throughout mid-trend pullbacks and reduction rallies. When leverage expands quicker than spot conviction and emotional positioning turns into one-sided, liquidation danger rises no matter value path. Tracking open curiosity, funding, change flows, SOPR, and NUPL collectively offers a constant framework for figuring out these susceptible zones in actual time.
The publish Bitcoin’s Most Dangerous Setups Formed Days Before October 10 Crash: How to Spot it Next Time appeared first on BeInCrypto.
