Overview: not a bull market right now
It is fair to say that the market mood has changed. A bull market means prices are going up for a long time and most people feel confident. The opposite is a bear market, when prices fall and people feel unsure. The recent moves show a shift away from a bull period for cryptocurrencies.
The biggest crypto, Bitcoin, has fallen a lot since its peak in October. The article notes that it has dropped by more than 50% from that October high and was around $60,000 late on a Thursday. This is the level that some traders talk about as a major move back toward older prices.
It is also important to know that in a single day, the price can move a lot. In the last 24 hours, Bitcoin fell from about $77,000 to $60,000. That is a very big drop in a short time.
What happened to other coins
Not only Bitcoin dropped. Many other cryptocurrencies, called altcoins, also lost value. Some altcoins fell by as much as 20%. One example mentioned is XRP, which was among those seeing bigger losses. When crypto prices move down quickly, many small traders and big investors can lose money at once.
Because prices fell so fast, a lot of trading positions were closed automatically to limit risk. This automatic closing is called liquidations. In one day, about 600,000 traders were liquidated. The total value of those closed positions was around $2.6 billion.
Despite some bounce back from the day’s lows, the market returned to levels last seen before the US presidential elections at the end of 2024. This means the prices were back to a level that had appeared a long time ago during a different period of politics and economics.
Why did this crash happen?
Analysts from the Kobeissi Letter, a research and analysis group, tried to explain what drove the big move. They said that even though Bitcoin has fallen a lot over months, the basic story for crypto assets remained similar. The crucial moment, they argue, was an event on October 10 when more than $19 billion in leveraged positions were wiped out. They call this a sign that something structural changed in the market that day.
To understand this, it helps to look back a little. The last major high in crypto before the drop came on October 6, just a few days before that big liquidations event on October 10. The analysts say that after October 10, the market never fully recovered. They describe a shift that affected how investors trade and how much money is available to support large trades.
What does this mean in plain language? In markets like crypto, many traders borrow money to buy more than they could with their own funds. This is called leverage. When the prices move against those traders, their brokers or exchanges may close their positions to avoid bigger losses. This process is what the Kobeissi Letter calls a structural change, a long-term shift in how the market works.
Leverage is a way to borrow funds to buy an investment. The idea is to increase potential gains, but it also increases potential losses. You can learn more about leverage in the definition box at the end of this article.
Since January 24, the Kobeissi team says about $10 billion worth of levered positions have been liquidated. That amount is about 55% of the record liquidations seen on October 10. In simple terms, a very large amount of borrowed money was forced out of the market, which makes it harder for prices to recover quickly.
What else shows this was a big, structural move?
The analysts provide more evidence. They note that selling pressure spread from crypto into other assets. They also point out that Bitcoin’s market depth was still more than 30% below its October peak. Market depth means how much money is available to absorb big buy or sell orders without moving the price a lot. When depth is lower, big orders can push the price up or down more quickly. The Kobeissi team says the last time market depth was this weak was after the FTX crash in 2022.
Another sign, they say, is that a large player—possibly an institution—sold or was liquidated during the violent trading session. When a big investor sells a lot quickly, it can push the price down very fast. You can see similar patterns in other big market drops when large players move in or out of the market.
Bottoms, depth, and the future: will prices bounce back?
People also want to know if the market has reached a bottom or if more pain is coming. A bottom is a price level where a market stops falling and starts to rise again in a sustained way. In crypto trading, many analysts say a bottom happens when liquidity—the money available to buy and sell—returns to normal levels and people feel less pessimistic. In practice, this means a mix of two things: prices stop falling, and traders stop leaving the market in large numbers, which helps stabilize prices.
The Kobeissi Letter analysts say the bottom will come when structural liquidity is restored. In other words, when there is enough money in the market to support reasonable trading and when the overall mood shifts from fear to a more balanced or hopeful outlook. They also emphasize that a strong change in sentiment—how people feel about the market—plays a big role in turning prices around. In their view, we may be close to such a turning point, but it is not guaranteed and depends on many factors.
The broader lesson from the day is that big moves in crypto markets can come from a mix of price swings, borrowed money, and big players ending or starting large trades. While the prices fell sharply this time, the market is watching closely to see if demand and liquidity return and if traders start to feel more confident again.
How to think about this as a beginner
For someone new to crypto, this kind of move can be confusing. Here are a few plain-language explanations of the main ideas you might hear about in reports like this one:
- Bitcoin is the first and most well-known cryptocurrency. It uses a technology called blockchain and works without a central authority like a bank or government. Learn more about Bitcoin.
- XRP is another cryptocurrency. It is tied to the XRP Ledger, a platform created for fast and cheap transfers. Learn more about XRP Ledger.
- FTX is a company that ran a cryptocurrency exchange and hedge fund, but it faced collapse in 2022. Learn more about FTX.
- Leverage means borrowing money to buy investments. This can amplify gains, but it also increases the risk of big losses. Learn more about leverage.
- Liquidation in trading means closing a trading position to limit losses. In a big move, many positions can be liquidated at the same time. Learn more about liquidation.
Summary
The day showed that crypto markets can move quickly and can be influenced by how much money is available to trade and how people feel about the market. While Bitcoin and other cryptocurrencies fell sharply, analysts say a bottom could be near if liquidity returns and sentiment improves. As always, investing in crypto involves risk, and prices can bounce up or down because of many different factors.