Bitcoin’s rally to an all-time high above $126,000 on October 6th marked the peak of a historic expansion. But within days, the trend reversed sharply.
According to new analysis from The Kobeissi Letter, the turning point came on October 10th, when President Trump threatened 100% tariffs on China, an announcement that coincided with the largest single-day crypto liquidation ever recorded: –$19.2 billion.
That liquidation shock broke the market’s momentum. Bitcoin failed to regain its footing, even during later periods of improved macro news.
Trade Relief Failed to Calm the Market
The situation worsened on October 30th, when a U.S.–China trade deal was reached. Instead of stabilizing sentiment, liquidation pressures intensified. Elevated leverage and crowded speculative positions resulted in continuous forced selling across derivatives markets.
By November 3rd, liquidation waves resumed, and from November 10th onward, Bitcoin drifted lower in an unusually linear decline. Average daily liquidations approached $1 billion, signaling a mechanically driven market rather than one reacting to new fundamental risks.
A 31% Decline Without a Fundamental Catalyst
By November 20th, Bitcoin had fallen 31% in 45 days, dropping to roughly $86,000. Notably, this occurred despite the absence of any significant bearish macro events. Equities and metals continued to post new highs during the same period, highlighting how isolated the crypto downturn has been.
The analysis concludes that the drawdown reflects a mechanical bear market, driven by excessive leverage, thin liquidity, and sporadic liquidation clusters feeding into one another. Structural fragility, not deteriorating fundamentals, was the dominant force behind the downturn.
A Market Clearing Process
Mechanical selloffs typically resolve once leverage fully unwinds and spot-driven flows regain dominance. If that pattern holds, the recent correction may represent a structural reset rather than a long-term shift in crypto’s fundamental trajectory.