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After nearly a year of bullish momentum, Bitcoin’s rally has finally hit turbulence. The world’s largest cryptocurrency has slipped back to the $100,000 range, marking its weakest performance since mid-2024 and signaling a temporary stall in the market’s seemingly unstoppable climb.
For traders accustomed to relentless gains, the pullback has reignited a familiar emotion — fear. But according to some analysts, including Vetle Lunde of K33 Research, the panic may actually be the first step toward recovery.
The Great Liquidation and Its Aftermath
The trouble began with what analysts are calling “Rotten October.” During that month, Bitcoin’s upward momentum was shattered by a record-breaking $20 billion liquidation event on October 10. Leverage-heavy traders were wiped out in hours, leading to cascading sell-offs across exchanges.
K33 Research reports that this event drained liquidity from key derivatives markets, leaving traders shaken. “The market isn’t short of cash — it’s short of conviction,” Lunde said.
He described the current period as a psychological hangover following the great liquidation. On-chain data reveals that over 319,000 BTC held for six months to a year were moved during October — suggesting that long-term holders began taking profits, flooding the market with supply just as demand weakened.
This combination of profit-taking and fading institutional inflows has left Bitcoin in what Lunde calls “hesitation trading mode” — a phase defined by choppy movements, declining volumes, and nervous sentiment.
Macro Turbulence Adds to Market Pressure
Beyond crypto-specific events, macroeconomic headwinds have intensified the pain. The Federal Reserve’s 25-basis-point rate cut earlier this month failed to stabilize sentiment, as fears of a U.S. government shutdown and uncertainty around future monetary policy weighed on risk assets.
In an unusual twist, Bitcoin’s correlation with traditional markets has inverted. While the Nasdaq and S&P 500 rose 4.8% and 2.3% in October, Bitcoin fell 4%, marking its weakest relative performance in over a year. Even gold, typically seen as Bitcoin’s safe-haven rival, climbed 3.7% during the same period.
This divergence suggests that investors have shifted back toward traditional assets amid short-term risk aversion — though history shows such periods rarely last.
Signs of a Bottom: Capitulation or Reset?
Despite the grim mood, Lunde’s research points to an encouraging parallel between today’s environment and past post-liquidation recovery phases.
“Periods like these are slow, heavy, and frustrating,” Lunde noted, “but they’re often the prelude to renewed momentum once selling pressure fades.”
His team’s derivatives regime indicator, which compares market structures across cycles, shows traits typical of capitulation followed by accumulation. In simpler terms, while traders remain fearful, the data suggests Bitcoin could already be forming a bottom.
He believes that, much like the aftermath of previous corrections, the current phase represents a reset rather than a collapse — a cooling-off period after an overheated market.
Fear Is Peaking — and That’s Usually Bullish
Market data supports the idea that sentiment may be nearing exhaustion.
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CME Bitcoin futures premiums have fallen to levels unseen since the March 2023 banking crisis.
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Open interest in Bitcoin derivatives has dropped to its lowest level since April 2024.
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K33’s sentiment index now shows “extreme fear” dominating trader psychology — a contrarian signal historically associated with market bottoms.
These metrics imply that the worst of the panic selling could already be over. In fact, periods of extreme fear often precede powerful rebounds as liquidity returns and short-sellers are forced to cover.
Lunde remains cautiously optimistic, saying he has rotated capital back into Bitcoin while trimming altcoin exposure. “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 Could Be a Reset, Not a Reversal
In Lunde’s view, Bitcoin’s current pullback reflects market normalization after an overheated period of speculative leverage.
Rather than signaling the end of the bull cycle, the correction may be setting the stage for a healthier and more sustainable uptrend.
He points to several underlying forces still working in Bitcoin’s favor:
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Easing monetary policy and potential Fed cuts in 2026.
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The introduction of 401(k) Bitcoin exposure options.
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Growing participation from major U.S. banks in digital asset infrastructure.
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A thawing regulatory climate in the U.S., following years of uncertainty.
“These aren’t the conditions of a four-year-cycle peak,” he said. “They’re the conditions of a market catching its breath.”
Lessons from History
Bitcoin has weathered similar conditions before. After major liquidations in 2018, 2020, and 2022, the market endured months of sideways action before rallying to new highs.
If this pattern repeats, the current slump could represent the final flush before the next leg higher.
Previous post-liquidation phases have historically ended once open interest stabilizes and long-term holders begin reaccumulating — trends that, according to Glassnode data, are already emerging.
The challenge, as always, is psychological: traders must endure boredom and fear before optimism returns.
The Road Ahead
For now, Bitcoin’s trajectory will depend on how quickly the market rebuilds confidence. Analysts agree that sentiment remains fragile, but technical conditions are improving beneath the surface.
If macro conditions stabilize and liquidity flows return, Bitcoin could reattempt the $115,000–$120,000 range before year-end.
However, should the fear-driven narrative persist, sideways trading near $100,000 could dominate the next several weeks.
Regardless of short-term direction, experts like Lunde see Bitcoin’s long-term foundation as solid — driven by increasing institutional adoption, resilient on-chain activity, and consistent global demand for decentralized value.
Conclusion
Bitcoin’s toughest month in a year has tested investor patience, but history and data suggest the pullback could mark the beginning of a recovery, not the end of a cycle.
With market fear near its peak and fundamentals intact, analysts argue this period may ultimately be remembered not as the collapse of a bull run, but as its necessary reset.
