October Crash Detailed Review: The Fundamental Reasons Behind the Sharp Price Drop

Since Bitcoin reached a new high in October, it has fallen over 30%. Perhaps many friends have been hurt during this correction and feel uneasy. Regardless, the decline is now an established fact, and what’s important is that we take away some lessons from it. Next, let’s review the fundamental reasons behind this sharp drop.
(Background recap: Using Bitcoin’s 2021 double-top structure as an example: discussing what “future data leaks” )
(Additional context: The reason I don’t place breakout orders: the trap of market makers hunting for liquidity)

Initially, I believed the high on 08/14 was the top, so the rally from 09/26 to 10/06 was completely unexpected. However, even during that rally and the new high, the market actually gave early warning signals, including:

• Sudden increase in profit pressure
• 100% win rate RUP divergence
• The exhaustion of capital inflow trend
• Overheated market sentiment among US funds

(RUP divergence diagram)

In theory, every sharp decline and massive liquidation in a bull market is a high-probability opportunity to add positions;

But at the same time, each cycle of a bull market has historically ended with a sharp drop.

Given the multiple top signals at the time, I was skeptical about the massive volume + spike on 10/11,

and did not reduce my BTC short positions that I had added at high levels.

Lifeline Clash & Breach

I have repeatedly emphasized: the spike on 10/11 is the lifeline for BTC because that day saw “massive volume + sharp drop + spike,” with trading volume driven by both buying and selling, indicating significant bottom-fishing capital on that day.

Once that spike was broken, it meant all the bullish forces that bottomed out that day were defeated, which could easily lead to further market panic and a “sell to everyone” scenario.

At this stage, since the lifeline has not yet been breached, I remain neutral; but the market was not idle, and some unfavorable signals for the bulls emerged, including “an increase in holdings with a holding period of 1-3 years”:

Ultimately, BTC completed a liquidity hunt (Stop Hunt) at 116K, and the lifeline was breached on 11/04, entering the next phase.

Bearish Intent: Brewing of a New Downtrend

The day before the lifeline was broken, a relatively rare signal appeared: “Foolish Money Trigger,”

which is the phenomenon of “US funds withdrawing + large Asian capital entering.”

After I posted about the “Foolish Money Signal,” the market started a new decline.

On 11/04, the downtrend was temporarily halted, and the price consolidated in the 99~105K range for five days. Many bloggers claimed that 98K provided support, and I believe many were bottom-fishing at that time, but I completely disagree and had no intention to do so.

The reason is simple: because the decline on 11/04 created a clear Equal Lows at 98K.

Equal Lows is a concept I have frequently mentioned over the past six months: “One of the forms of liquidity accumulation zones.”

A liquidity accumulation zone indicates a region with a large amount of liquidity, which strongly attracts prices, making it likely for the price to revisit that area in the future.

Between 11/06 and 11/13, I posted six articles, each emphasizing “the attractiveness & vulnerability of 98K,” and over the past week, BTC continued to show some bearish signals, including “shrinking new buyers,” “de-sensitization from Maker,” and others.

Summary

Once again, I emphasize: regardless of the situation, the decline is an established fact. What’s crucial is that you learn and gain from it.

This article aims to review the signs that appeared before and after the sharp drop, serving as a record for myself. I hope it helps everyone. Thank you for reading this far.

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