A Costly Lesson in Leverage

October delivered a harsh lesson to cryptocurrency traders, as a market crash triggered approximately $19 billion in losses from leveraged positions. The sudden downturn began after news of potential U.S. tariffs on China, causing a sharp decline in Bitcoin’s price and forcing more than 1.6 million traders to close their positions. According to data from CoinGlass, long traders bore the brunt of the impact, losing nearly $17 billion. In one extreme case, a single trader on the Hyperliquid platform reportedly lost $19 million.

The event wiped out months of gains and served as a stark reminder of the volatility associated with leveraged trading. While a few investors profited by shorting Bitcoin ahead of the drop, the widespread liquidations left the market shaken. By the end of the month, Bitcoin’s price had stabilized, trading in a range between $108,000 and $116,000.

Spot Trading Gains Strength

In the wake of the crash, traders shifted their focus toward the relative safety of spot markets. Bitcoin spot trading volume surged to over $300 billion in October, marking the second-highest monthly total of the year. The Binance exchange dominated this activity, handling roughly $174 billion of the total volume from both retail and institutional participants.

Analysts at CryptoQuant noted that the rise in spot trading suggests a broader trend toward genuine accumulation over short-term speculation. This transition from betting on price swings to outright ownership could lay a more stable foundation for the market. When prices are driven by actual buying and selling rather than leveraged contracts, it often reflects more authentic demand and can lead to less extreme volatility.

Analysts Warn of a Fragile Recovery

Despite the renewed interest in spot markets, some analysts remain cautious. The on-chain analytics firm Santiment observed that retail traders were becoming overly optimistic, with many “buying the dip” prematurely—a pattern that often precedes further losses. Market analyst Ali Martinez also pointed to warning signs, highlighting a potential sell signal from the TD Sequential indicator.

Lingering concerns about global liquidity continue to weigh on the market, even after the Federal Reserve’s recent 25-basis-point rate cut, which itself prompted another $700 million in liquidations across the crypto markets.

Signs of Long-Term Accumulation

Exchange data provides further evidence of a shift toward direct Bitcoin ownership. The total amount of BTC held on exchanges fell from 2.65 million to 2.38 million during October, indicating that more investors are moving coins into personal wallets for long-term holding. While some large-scale investors, or whales, moved significant funds onto exchanges to sell, many others continued to accumulate.

Data from exchanges showed mixed flows. Sell-taker orders slightly outnumbered buy orders on Binance, while Bybit experienced stronger buying activity. Despite these variations, the overall balance leaned toward accumulation, with many traders using time-weighted average price (TWAP) orders to build positions gradually without causing price spikes.