Two "painting gates" in one day, both long and short positions exploded, what is the scenario of the crypto market?

The cryptocurrency market experienced extreme volatility with two sharp "painting gate" reversals within a single day, causing significant liquidations for both long and short positions totaling $772 million. Bitcoin briefly surged to $114,000 before falling to $108,260, while Ethereum dropped from $4,110 to $3,850.

Market Data & Liquidations: BTC and ETH spot ETFs saw cooling inflows, with BTC ETFs recording net outflows for four consecutive days. Bitcoin open interest fell by approximately 30%, reducing excessive leverage.
Macro Factors: A potential Bank of Japan rate hike, a 6% plunge in gold prices, and geopolitical developments regarding the Russia-Ukraine conflict contributed to the volatility. Market hopes are pinned on anticipated Fed rate cuts.
Trader Activity: A notable "insider whale" successfully shorted BTC with a $227 million position, while another trader incurred over $1 million in losses chasing ETH's price rise.
Analyst Views: Matrixport highlights Bitcoin's struggle with the 21-week moving average as a critical bull/bear indicator. CryptoQuant notes weak futures liquidity and diminished buyer initiative, whereas Trader Nachi remains extremely bullish, predicting BTC could surpass $200,000.

Author: Dingdang

We experienced two "Hua Men" market trends in one day.

As professional trader Eugene said, the crypto market is at a hellish level of difficulty, and even excellent traders may not be able to escape the fate of being repeatedly "harvested".

Let's first look at the market data. BTC surged to $114,000 before plummeting, currently trading at $108,260, a 24-hour drop of 1.85%. ETH plummeted from $4,110 to $3,850, a 2.73% drop. Sol (SOL) is currently trading at $186, down 0.98%. Binance (BNB) is trading at $1,062, down 3.13%. (If you ignore the process, the daily decline alone isn't particularly impressive in recent times.)

According to derivatives data, in the past 24 hours, the total amount of liquidation was US$772 million, of which US$298 million was for long positions and US$261 million was for short positions. The largest single liquidation occurred in Hyperliquid - BTC-USD, with a value of US$14.4539 million.

In yesterday's market, the word "fairness" seemed particularly cruel - both bulls and bears perished.

ETF inflows have also begun to cool. After a surge in inflows last week, BTC spot ETFs have seen net outflows for four consecutive days. ETH spot ETFs have also seen relatively weak net inflows recently, with net outflows for three consecutive days.

According to Glassnode data, Bitcoin open interest has dropped by approximately 30%, significantly eliminating excessive leverage in the market. Funding rates are approaching neutral, significantly reducing the probability of triggering another "liquidation waterfall" in the near term.

Macro scenario: Gold plummets, may the Russia-Ukraine conflict end?

At the macro level, what was the scenario for the crypto market yesterday?

Masamichi Adachi, Chief Japan Economist at UBS Global Research, stated that the Bank of Japan is "very likely" to raise interest rates in the coming months. He noted that Japan's real interest rates remain negative, indicating that financial conditions remain excessively loose. Inflation expectations have continued to rise toward the 2% range, further solidifying the argument for an "exit from easing." UBS predicts the Bank of Japan will raise interest rates by 25 basis points in January, but does not rule out an earlier move in December.

Last night, spot gold prices plummeted 6%. After hitting a high of $4,381 per ounce on Monday, they plummeted to $4,082 per ounce on Tuesday, their biggest drop in over 12 years. Meanwhile, market sources reported that Europe and Ukraine had reportedly prepared a 12-point plan to end the Russia-Ukraine conflict. In the early morning hours, US President Trump suggested that his meeting with President Xi might not take place, sending market prices plummeting again.

This series of events caused the market to complete the entire process from "reversal" to "fall" in a matter of hours. It truly confirmed the saying in the community: "Analysis is as fierce as a tiger, and the rise and fall are all due to Trump."

At this point, the market's only remaining hope may be an interest rate cut. According to a Reuters survey of economists conducted from October 15th to 21st, the Federal Reserve is highly likely to cut interest rates by 25 basis points each next week and in December. CME's "FedWatch" data also shows a 99.4% probability of an October rate cut and a 98.6% probability of a 50 basis point cut in December.

However, disagreements remain sharp on where interest rates will be at the end of next year - meaning markets haven't really found a direction.

Star traders

The only true trading star in the crypto market right now is the "10.11 Insider Whale," who has now shorted BTC 10x more. His current short position is worth $227 million, with a profit exceeding $5 million and $123,271 liquidated.

Another example is a negative example. A hacker who previously lost $8.88 million in ETH trading chased the price increase again last night, buying 7,126.74 ETH (worth approximately $29.03 million) at an average price of $4,020. Upon waking up, he had realized a loss of over $1 million. Analysts quipped, "If it's not your own money, you don't feel bad about spending it."

Market View

Matrixport: Bitcoin hits 21-week moving average, market focuses on key technical positions

Matrixport published a chart showing that the 21-week moving average has once again become a key indicator for Bitcoin's performance. This level has historically been considered a crucial turning point between bull and bear markets: a move above it often signals a shift from bearish to bullish, while a break below it typically signals a correction. If Bitcoin fails to reclaim this level for an extended period, the current consolidation could potentially escalate into a deeper correction.

The current correction is still relatively mild. Against the backdrop of the market's general expectation that the Federal Reserve will continue to cut interest rates, the overall trend may remain controllable unless the US economy shows a significant weakening.

Historically, the ideal entry point often occurs when Bitcoin briefly falls below this moving average and then re-emerges and maintains this level for a prolonged period. Before this signal appears, investors should remain cautious.

CryptoQuant: Bitcoin futures liquidity is weak and buyer initiative has significantly weakened

According to CryptoQuant analyst Axel Adler Jr., the Bitcoin Futures Liquidity Index indicates the market remains in a weak zone (<45). Bulls attempted to regain market control twice, on October 13 and October 20, but both attempts failed. The first attempt, while powerful, quickly lost momentum, while the second lacked sustained momentum.

The current price is still below the 30-day fair value, futures liquidity is weak, and buyer initiative has significantly weakened, indicating that the market bulls are already tired.

Trader Nachi: Extremely bullish on Bitcoin, expecting BTC to break through $200,000 in the next 6 to 12 months

According to Binance trader Nachi's latest post, he has closed all short positions and switched entirely to long perpetual swaps. He firmly believes that last Friday may have marked a critical bottom for Bitcoin, with market capital flowing from gold to Bitcoin. Nachi remains extremely bullish on the market, predicting Bitcoin will surpass $200,000 and Ethereum will surpass $10,000 in the next 6 to 12 months.

In today's market, there are more and more discussions about bulls and bears. However, in a hellish market, there are no myths, only survivors.