Friday, October 10, was one of the most memorable days in crypto history. The market witnessed its largest liquidation event amid trade tensions between the U.S and China. This incident spread across and has affected several parts of the market, including the spot, futures, and derivatives segments.
While the event led to massive losses for investors, the market research firm Glassnode believes the deleveraging was a necessary reset for the market.
A Necessary Reset
As the market witnessed the wipeout of more than $19 billion in open interest, futures funding has dropped to levels not seen since the 2022 bear cycle. Leverage unwound rapidly, triggering widespread liquidations and a sharp market reset.
Indicators like the Bitcoin Relative Strength Index (RSI) and Cumulative Volume Delta (CVD) have demonstrated the extent of the reset. The RSI fell 26% from 71.7 to 52.8, indicating a shift from strong bullish momentum to neutrality. Spot CVD declined 3,883.5% from $8.6 million to -$326.9 million.
The RSI demonstrates cooling buying momentum, while spot CVD shows intensified sell pressure. The former reflects a moderation in market enthusiasm, while the latter indicates growing bearish sentiment amid trader anticipation for further downside.
On the other hand, futures open interest has contracted, reflecting a decline in risk across derivatives markets as investors realize losses. The open interest has decreased from $48.7 billion to $45.1 billion, while funding rates have plummeted by over 51%, from $2.9 million to $1.4 million. Additionally, perpetual CVD has dropped below its low statistical band, signaling intense selling pressure and dominant bearish sentiment.
Confidence Slowly Rebuilding
Furthermore, open interest in the options market has risen 12.9% as traders reposition themselves for new volatility regimes. This rise signals meaningful market engagement and moderate speculative or hedging activity. Glassnode analysts say the modest rise in skew indicates renewed demand for downside protection as investors exercise more caution.
These shifts in rates and open interest cleared excess leverage, recalibrated short-term sentiment, and reduced speculative positioning. Amid the latest development, the broader market structure has remained intact with continued exchange-traded fund (ETF) flows and elevated spot trading volumes.
With leveraged participants flushed out, structural capital and institutional demand remain present. The market is now in a consolidation phase, with confidence slowly rebuilding across the spot and derivatives segments.
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