Bitcoin and altcoins faced an unprecedented liquidation event last week, with over 1.6 million leveraged traders affected. This event has significantly altered the positions of both individual and institutional traders. As the bearish wave has calmed, both sides seem to have reached a temporary balance, with attention now turning to the opening of the stock market on Monday.

Resetting the Crypto Market

The dramatic liquidation, labeled a “perfectly executed trade” by market analyst Doctor Profit, eliminated nearly all leveraged positions on various altcoins, reaching liquidation rates of about 99%. Doctor Profit highlighted a distribution phase in the market that began in August, during which major market participants strategically sold Bitcoin while retail investors continued to buy into short-term rallies.

This cleansing event, although painful, has historically resulted in a choice between new accumulation or significant market reversals. Indicators known as the “Blood Moon effect” suggest that after such events, the market eventually stabilizes and prepares for subsequent directional changes.

Market Conditions and Global Perspectives

In the aftermath of the event, the focus shifts towards larger economic factors. Notably, while many markets will remain closed due to the Columbus Day holiday, key infrastructure outages in the United States could lead to reduced liquidity, heightening the potential for sharp price shifts.

Globally, tensions are rising in the semiconductor sector, particularly following China’s enactment of a ban on NVIDIA GPU purchases, which potentially compromises about 40% of the company’s revenue alongside decreasing demand from the U.S.

Current Market Sentiment

Doctor Profit indicates that holding positions in Bitcoin and altcoins is advisable as the market awaits the stock market’s direction on Monday. Some analysts are optimistic about Bitcoin’s potential to reach new heights, possibly approaching $130,000, should critical support levels remain robust. However, caution persists as some believe that cryptocurrencies and equities may not perform in alignment in the near future.

“Now let the dust settle, we prepare for the next major move. It’s still early to call the next direction with certainty, but one thing is already clear: the max-bearish scenario is off the table. The market has reset. Bulls and bears now stand on equal ground in crypto, the imbalance is gone.” - Doctor Profit

While the stock market has yet to align with crypto movements, it is critical to monitor its opening alongside the fluctuations of the Japanese Yen.