In the wake of Bitcoin’s spectacular cascade to $60,000 last week, the Crypto Fear and Greed Index printed a 5. That’s lower than the Terra Luna collapse, lower than the FTX crash, and lower than the 2022 market bottom.
The drawdown liquidated over $2.5 billion in positions in a single day. On-chain data indicates that this was the single largest realized loss event in Bitcoin’s entire history.
And YET none of the indicators saw this coming.
Naturally, this raises a few questions, but principal among them: did we just witness a complete collapse of crypto market structure?
Something definitely seems to have “broken,” and we might be able to trace it back to the beginning of the current bear market on October 10, 2025.
Two bitcoin crashes, (maybe) one story
Let’s start with the supposed beginning of the current drawdown, October 10, 2025 (now known as “10/10” in crypto circles), and whether or not something broke in bitcoin’s market structure.
Bitcoin’s crash on October 10 wiped out $19 billion in a matter of hours, as bitcoin dropped 12.5% from its $125,000 all time high. Was this natural market phenomena or is someone specific to blame?
Binance has become a scapegoat for this crash, so much so that Binance co-CEO Richard Teng was defending the exchange at Consensus Hong Kong just today.
Depending on who you ask, there is enough smoke here for people to yell fire. OKX’s CEO says Binance’s USDe yield campaign created a leverage bomb, and on-chain sleuths found a mystery account that opened $1.1 billion in bitcoin shorts on Hyperliquid right before impact.
Not everyone is convinced of these framings, though.
Wintermute’s CEO, for example, said it was just a flash crash on a Friday night with thin trading volume. Binance takes this line as well, and it has set aside a $328 million fund to compensate to its users for incidents on its platform related to USDe index deviation and internal “asset matching degradation” during the crash.
TL;DR: nobody agrees on what happened on 10/10.
Now, flashback to February 5, and the trouble deepens. Bitcoin dropped from $76K to $60K in a harrowing 24 hour period.
The most compelling theory for what’s ailing bitcoin connects the two crashes directly: Hong Kong hedge funds running leveraged IBIT options with yen-borrowed capital got wrecked on 10/10, doubled down, piled into silver – which also blew up – and then the final BTC push finished them off.
Because they traded ETFs (and not spot crypto),this washout didn’t pop up on the crypto world’s radar until it was over. Meanwhile, stablecoins lost $14 billion from December through February and the cash-and-carry yield (Bitcoin basis trade) collapsed from 17% yields to under 5%.
This is the telltale sign that capital wasn’t rotating – it was exiting crypto altogether.
When there is blood in the streets…
All of this, however, hasn’t deterred some of the largest institutions from betting on bitcoin and its cohort of misfit cryptos.
Goldman Sachs just disclosed $2.36 billion in crypto exposure across spot ETFs in BTC, ETH, SOL, and XRP, and Bernstein is still holding its $150,000 year-end target.
The bear case is strong, but the worst may almost be over.
“I wouldn’t be surprised by $40-60K over the next year” says bitcoin trader FarmerJoe. “AI is the capital magnet stealing flows from crypto, and until that shifts, Bitcoin faces a structural headwind.”
Peter Brandt, using his long-term “banana peel” chart, says the bulls shouldn’t need to suffer much south of $42,000. but that’s still a long way down from here. Brandt refers to the Bitcoin decline as “campaign [institutional] selling, not retail liquidation”
James Check of Checkonchain labeled last week as a “textbook capitulation event” meaning rapid, high-volume, crystallizing losses from the lowest-conviction holders. James’s analysis still warns that this could progress “deeper into the bear” and that last week may not have been “the final capitulation event.”
All your bitcoin models are broken (in a bad way)
If cycle models mean anything, the bitcoin top never really manifested – at least, not in the same ways we have seen in past cycles. There was no euphoria. No classic blowoff-top. The crashes came from leverage plumbing failures and macro shocks. We are still 0 for 30 indicators flashing top so either every model is broken, or this isn’t over.
I personally think the models are broken and you have to hold tight for a while.
To close, let’s check in on how the trenches are doing. I hit up one of my degenerate discord haunts, the Bitcoin trading server Debauchery.“[The trenches are] like WW1. You’ve got to wade through shit just to get ahead 2 inches,” MizzleG put it.
Header image by Georg Pahl via Creative Commons.
