An 18% flush just jolted Bitcoin, dragging price to $110,000 from above $125,000 and setting up the first potential “red” October since 2017. But beneath the headlines, this looks less like a trend break and more like a classic leverage purge: futures open interest swelled, funding flipped, and cascading liquidations reportedly peaked around $52B—the kind of reset that often seeds the next move.

What Just Happened

Leverage built up across BTC markets and then unwound fast. That deleveraging hit Bitcoin hardest, with correlated volatility in majors like Ethereum. Analysts including PlanB and VanEck’s Matthew Sigel frame the move as a mid‑cycle correction, not the start of a bear market. PlanB highlights potential support around $100,000, while Sigel notes that a “leverage flush creates opportunity” and that cascading liquidations drove the ~18% drawdown rather than fundamental deterioration.

Why This Matters to Traders

- Price action was driven by positioning, not a collapse in usage: daily active addresses stayed elevated, signaling sticky network engagement. - The path forward is likely set by institutional flows—especially ETF inflows/outflows—and how quickly derivatives leverage re-accumulates. - When liquidations—not spot selling—dominate, the downside often exhausts faster, but failed bounces can follow if OI rebuilds too quickly.

Market Structure in Focus

Momentum broke on the drawdown, but the higher‑timeframe uptrend remains intact unless $100,000 fails convincingly. Derivatives metrics are the tell: - If open interest stays muted while price stabilizes, it’s constructive—spot demand is in control. - If funding spikes and OI ramps before spot bids return, expect chop and potential retests. - Watch ETF net flows daily; persistent inflows tend to absorb supply and tighten spreads into strength.

Actionable Playbook

• Map levels: $100,000 (major spot support), $110,000 (post‑flush pivot), $125,000 (supply from prior highs). Trade reaction, not prediction.
• Trade the reset: favor spot or low‑leverage exposure until OI/funding re‑normalize. Avoid chasing if funding gets positive too quickly.
• Confirm with flows: align adds with sustained ETF inflows and rising spot volumes; fade strength if inflows stall and perp premiums lead.
• Manage risk: place stops beyond liquidity magnets, scale in/out rather than all‑in bets, and size for elevated ATR.
• Hedge tactically: consider protective puts or short perps against spot if support weakens; lift hedges on ETF‑driven spot demand.

Bottom Line

This looks like a leverage-driven mid‑cycle reset, not a structural breakdown. Keep focus on $100,000–$110,000 reaction, derivatives re‑risking pace, and ETF flow direction. Let the data—not the fear—set your next trade.

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