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- Historical data show major Bitcoin liquidations often cleanse leverage, strengthening the market and preparing for future rallies.
- On-chain signals from October 2025 reflect another healthy reset driven by ETF inflows and institutional liquidity.
Bitcoin has once again captured attention after a major liquidation storm rocked the market on October 10th. In an instant, approximately $19 billion in positions were wiped out due to concerns about trade tariffs between the United States and China. The price plunged 8% to around $104,000 before slowly recovering.
As of press time, BTC is trading at about $111,854, down 1.32% in 4 hours, 3.02% in 24 hours, and 10.30% in a week. But behind the decline, on-chain analysts are seeing something more interesting: an old pattern repeating itself.
History Repeats: Every Bitcoin Crash Sparks Its Own Recovery
According to analyst XWIN Research Japan on CryptoQuant, every time Bitcoin experiences a major liquidation wave, the market experiences a natural recovery.
“Throughout history, events like this have not been the end of a bullish trend, but rather a phase of leverage clearing that strengthens the market structure,” he wrote in his latest on-chain research report.
He highlighted five key moments that exhibited a similar pattern—from February, April, May, and September 2021, through the recent October 2025 event. In each instance, there was a similar rhythm: leverage collapse, panic, then stabilization and recovery.
For example, on February 22, 2021, a healthy correction caused Bitcoin to briefly fall, but it managed to recover its high within a month.
Meanwhile, April 18 saw a 20 percent drop due to an overheated market and negative news. Then, on May 19, Tesla’s decision to halt Bitcoin payments and China’s ban caused the price to plummet 30%.
But Bitcoin soon rebounded. Even on September 7, when El Salvador’s Bitcoin law triggered a rapid sell-off to $40,000, the price managed to recover to $53,000 in a short time.
The same phenomenon was seen in October 2025. This time, panic briefly gripped the market, but it was short-lived. Support from ETF inflows, institutional liquidity, and a decline in Bitcoin balances on exchanges indicated that the market was beginning to adapt to a new phase.
On the other hand, on-chain data shows the leverage ratio has plummeted, the funding rate is approaching zero, and the aSOPR metric has risen above 1.0—signs that investors are shifting from panic to accumulation.
Signs Suggest the Shake-Out Isn’t Over Just Yet
However, this doesn’t mean the recovery phase will be smooth sailing. CNF previously reported that, despite the market losing approximately $800 billion in capitalization, the NUPL indicator shows that most Bitcoin holders are still in a profitable position.
This means that the emotional capitulation phase is not yet fully over. The market structure may appear cleaner, but the resilience of sentiment could signal that there will be one more “small shock” before a full recovery begins.
Furthermore, analysts observe that the greater the liquidation, the stronger the chances of a recovery. The pattern is almost always the same: every time the market clears leverage, spot demand takes over.
That’s why XWIN Research Japan believes that October 2025 will not be remembered as a crash, but rather the starting point of the next Bitcoin rally.
