Bitcoin’s sharp October pullback has many calling time on the rally—but the liquidity backdrop tells a different story. Fresh analysis from VanEck argues the drawdown was a mid‑cycle reset, not the start of a bear market, pointing to falling leverage, rising on‑chain activity, and expanding global M2 as the key drivers keeping the bull case intact. With Bitcoin still ~14% off its ATH and a pivotal CPI print ahead, traders face a high‑volatility window packed with opportunity—if they’re watching the right signals.

What’s Really Moving Bitcoin Right Now

VanEck highlights that global M2 growth explains over half of Bitcoin’s price variance. Year to date, global M2 is up ~6.8%, reinforcing BTC’s role as an anti‑money‑printing asset. Leverage sits around the 61st percentile—down from peak froth—while on‑chain revenues are recovering, signaling real user activity.

Crucially, changes in futures open interest have explained a large share of BTC price variance since 2020, underscoring how positioning and liquidity dominate short‑term price. Prices are also near one‑year lows relative to gold, fitting a mid‑cycle correction rather than a top.

Why This Matters to Traders

If liquidity is expanding and leverage has normalized, the path of least resistance can remain higher—even as headlines stay bearish. But near‑term direction hinges on macro: a hotter CPI implies tighter policy and risk‑off; a cooler print loosens conditions and supports a crypto bounce.

Key Risks Into CPI

- Upside CPI surprise: pushes yields higher, compresses risk appetite, pressures BTC and alts. - Downside CPI surprise: eases policy expectations, risk markets rebound—watch for momentum follow‑through if open interest rebuilds cleanly. - Leverage re‑acceleration: rapid OI spikes after a bounce raise liquidation risk; fade crowded leverage, not trend.

Your Trading Playbook

• Track global liquidity proxies: global M2 trends, DXY, real yields. Sustained M2 expansion supports a medium‑term bullish bias.
• Watch futures open interest and funding: rising price with flat/declining OI = healthier; rising price with surging OI = chase risk.
• Monitor on‑chain revenues/fees: improving throughput and fee revenue indicate real demand, strengthening dips.
• Use the BTC/gold ratio: proximity to one‑year lows favors asymmetric entries if macro doesn’t tighten materially.
• Manage event risk: size down or hedge into CPI; consider options collars or put spreads to cap downside.
• Execution: ladder entries on liquidity sweeps; set alerts at prior liquidation zones; avoid over‑levered exposure pre‑data.

Bottom Line

VanEck’s framework suggests the Bitcoin bull market remains intact despite October’s flush. The next decisive catalyst is CPI: let the data set direction, use leverage and OI to gauge durability, and align with liquidity rather than headlines.

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