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BTC Bitcoin started strongly in October, and the accumulation of leverage raised concerns about market volatility.
Bitcoin performed better than its typical historical seasonal pattern in October. As leverage builds up near important price ranges, the market is increasingly questioning its potential trend.
October counter-expectations: Bitcoin achieved early gains
CryptoQuant analyst Andrew Kamsky pointed out that historically the first three days of October are usually the weakest periods of the month, with an average decline of 0.66%. In contrast, performance in early October this year exceeded market expectations.
Bitcoin closed at US$83,574 at the end of September and at US$84,743 on October 3, an increase of 1.4%. Between October 1 and October 3, Bitcoin fell only 0.14%, better than the historical average decline during this period. As of October 4, CryptoQuant estimated the price of Bitcoin at US$85,132, maintaining a 1.86% increase since the end of September.
September results also violated regular patterns. Bitcoin did not show a typical average decline of 4.02% in September, but rose by 6.39%. Kamsky said this resilience had continued into early October. Although historical trends show that early October is usually weak, Bitcoin posted gains in both September and early October, showing strong resilience.
Key clearing levels and volatility potential
Although the market was relatively calm in early October, derivatives market data showed that if Bitcoin breaks through a specific price range, volatility may rise rapidly. Leading analysts CoinGlass and Glassnode both pointed to concentrated liquidity and potential liquidation risks in the upward and downward directions.
CoinGlass noted that there are numerous clearing levels above the current price of $87,600 and below $83,400, indicating a narrow trading range with potential for significant upside and downside. Glassnode's research shows that the greatest liquidation risk is concentrated around $90,000, but there are also smaller clusters around $83,000 and $75,000. This creates a relatively narrow trading area where derivatives traders face significant exposure in both directions.
On October 5, Bitcoin traded at around $86,000. Analysts warned that a break below US$83,400 could expose the market to the risk of poor liquidity, while a break above US$87,600 and move towards US$90,000 could trigger a wave of short liquidations that would accelerate price movements.
These liquidity areas reflect the growth in market leverage as traders build positions around key support and resistance levels. Analysis by both institutions suggests that the next decisive move may be accompanied by a surge in volatility, as traders trading in both directions face the risk of forced liquidation.
Long-term Valuation and Market Cycle Background
AntiFragile, chief analyst at Glassnode, pointed out that Bitcoin's current price is below its long-term average valuation-the "Mean MVRV Price" by about 13%. The indicator estimates fair value based on the behavior of investors on the chain by multiplying the realized price of Bitcoin by the average of its long-term market value to realized value ratio.
Explanation of Terms: The mean MVRV price is a valuation indicator used to determine whether Bitcoin is above or below its typical historical market capital-realized value relationship, thereby providing insight into potential overvaluation or undervaluation.
According to AntiFragile, in previous market cycles, Bitcoin tended to show its strongest gains after closing above this level, and cycle highs usually occurred more than a year later. However, there is no guarantee that historical cycles will repeat.
The combination of a strong start to October and heavy derivatives holdings means that Bitcoin's next move could be drastic, depending on whether it can maintain upward momentum or fall below important support areas. While past cycles provide background reference, current leverage levels and liquidity conditions may pose unique volatility risks as October moves forward.
When weighing the situation, traders and investors face a key question: Can Bitcoin maintain its early gains and recover a higher long-term valuation, or will the shift in clearing areas attract new selling pressure?
