Largest-ever liquidations shake up market – Is the October rally still alive?
Key Takeaways
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How bad were the crypto liquidations?
Massive. Nearly $19 billion wiped out in the largest crypto liquidation ever, with longs taking 90% of the hit. This triggered a sharp risk-off shift.
Are traders panicking?
Cautious, not blind. In fact, this could be a reality check on prior FOMO, possibly setting up a post-COVID-style rebound.
The market once again showed that “blind optimism” can cut both ways. Q4 kicked off with TOTAL crypto market cap hitting a record $4.27 trillion, pumping in almost $450 billion in week one.
At the same time, Open Interest (OI) reached a record $233 billion, with almost $40 billion added in October. In short, the market was bullishly pricing in the seasonal tailwind as a key catalyst for a strong Q4.
The federal shutdown only hyped this bet. Key macro data went under the radar, pushing blind optimism to a whole new level. But after the recent crypto bloodbath, is the seasonal tailwind starting to crack?
Biggest ever crypto bloodbath tops COVID-era losses
After the Trump-China trade-off, macro sentiment flipped fast.
What kicked off as just $8 billion in liquidations quickly snowballed into a massive exit wave. As fear began creeping in, traders started pricing in the tariff impact on an already shaky U.S. economy.
The fallout? Nearly $19 billion was wiped out in the largest crypto liquidation ever, beating even the COVID crash. Longs bore the brunt, taking almost 90% of the losses, with $16 billion+ squeezed.
Source: Coinglass
In short, earlier “bullish optimism” backfired, worsening the crash.
The TOTAL market cap, for instance, posted its longest red candle, dipping 9.38% to $3.24 trillion. That’s a brutal $850 billion wipe, pushing the index back to early July levels. Overall, this move flagged a sharp risk-off shift.
The result? OI slid to $154 billion, shedding $80 billion in unwind. Even so, some traders stayed bullish, seeing it as just another “healthy” reset. Could this signal a shift from blind to “cautious optimism” in the market?
Crypto liquidations forced a reality check on FOMO
Even with the crypto liquidations, it’s too early to declare full-blown FUD.
Backing this, TOTAL market cap is already up 12% intraday to $3.7 trillion, pumping $420 billion back in. That’s a clear sign buyers are stepping in, keeping some seasonal tailwind alive despite the recent shakeout.
Meanwhile, the Fear & Greed Index dropped nearly 20 points to 54, sliding into the “fear” zone. Notably, this is a key divergence from the April FUD, when the index tanked into extreme fear territory.
Source: CoinMarketCap
Simply put, the October catalyst hasn’t fully flipped yet.
This backs AMBCrypto’s view that the market is rotating cautiously, without diving headfirst into panic. If this trend holds, it acts as a “much-needed” reality check on the earlier FOMO surge.
With leverage down and weak hands shaken out, the setup could be ripe for a post-COVID-style rebound. In this light, the recent crypto liquidations feel more like a healthy deleverage rather than a full-blown sell-off.
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