Emerging Momentum in the Bitcoin Market After the 1011 Crash

TL;DR

• The 1011 crypto crash has dampened market sentiment, but recent developments, including Trump's TACO and Sanae's election as Japanese Prime Minister, are fostering recovery.
• Bitcoin's on-chain data shows significant changes, such as a sharp drop in open interest leverage, reduced percent supply in profit, and new funds entering at around $108k, signaling potential upward momentum.
• Despite short-term challenges, these indicators suggest the bull market persists, with Bitcoin maintaining higher lows compared to previous dips.
• Investors should monitor resistance levels around $118k, as overcoming them could pave the way for Bitcoin to approach or surpass its all-time high of $126k.

Introduction

The cryptocurrency market's volatility was starkly evident in the recent 1011 crypto crash, which triggered sharp corrections after Bitcoin's all-time high of $126k. Investors now seek signs of recovery amid shifting bull market dynamics. This article examines key on-chain metrics and macroeconomic factors driving emerging momentum, focusing on Bitcoin's price resilience above $100k and indicators of sustained bullish trends.

Trump Re-enacts TACO, Sanae's Election Benefits the Market

Since the 1011 flash crash last week, market sentiment has been subdued. However, the U.S. President Trump's re-enactment of the TACO scenario signals potential de-escalation in U.S.-China tariff tensions, boosting Bitcoin and Ethereum prices from last weekend.

In addition to these U.S.-centric developments, a significant event unfolded on the international stage today, October 21, 2025: Sanae has been officially elected as the new Prime Minister of Japan. Sanae, known for her advocacy of "Abenomics"—the economic policy framework popularized by former Prime Minister Shinzo Abe—promotes a Japanese version of quantitative easing. This approach involves expansive monetary policies aimed at stimulating economic growth through increased liquidity and lower interest rates. For the broader macroeconomic environment, this election introduces positive elements that could ripple into financial markets worldwide. 

New Changes in BTC’s On-Chain Data

Following the 1011 flash crash, Bitcoin's on-chain data has exhibited notable shifts that could provide directional clues for the upcoming market phase. On-chain metrics, which track the actual movements and behaviors on the Bitcoin blockchain, offer a transparent view into investor activity and network health. These changes are particularly insightful in a post-crash scenario, where distinguishing between temporary setbacks and structural shifts is crucial for informed decision-making. 

Significant Drop in Open Interest Leverage Levels

The open interest in the contracts market serves as a reliable gauge of overall market enthusiasm and participation. Since April of this year, Bitcoin's open interest in futures and perpetual contracts has been on a steady upward trajectory, mirroring the asset's price surge from over $70,000 to its all-time high of $126,000. This escalation in open interest underscores the influx of speculative capital that fueled the bull market's momentum. However, open interest fundamentally represents leveraged positions, and excessive leverage can amplify both gains and losses. When leverage builds to unsustainable levels, it often precipitates liquidations, where positions are forcibly closed to manage risk, thereby alleviating market pressure.

In the current context, post the 1011 flash crash, Bitcoin's open interest in the futures market has experienced a substantial reduction. This decline, while inflicting short-term losses on some leveraged traders, plays a vital role in market cleansing. By eliminating overextended positions, the market effectively lightens its load, creating room for healthier price discovery. From a long-term perspective, this process is essential for accumulating the necessary energy to propel the next upward cycle. Historical precedents show that such deleveraging events often precede periods of consolidation followed by renewed rallies, as they reset the speculative fervor without undermining the underlying bull market trend. For investors monitoring Bitcoin's price, this drop in open interest could signal that the worst of the bearish phase is behind us, paving the way for a more balanced ascent.

Source: Glassnode

Significant Drop in BTC Percent Supply in Profit

Another critical on-chain metric, the Percent Supply in Profit for Bitcoin, has undergone a marked decrease since the 1011 flash crash. Prior to the event, this figure hovered above 98%, indicating that nearly all Bitcoin holders were in profitable positions—a hallmark of euphoric bull market peaks. However, the crash drove this percentage down to approximately 78%, reflecting widespread unrealized losses among investors. To contextualize this, the last instance when Bitcoin's Percent Supply in Profit dipped into the low 70% range occurred in April of this year, coinciding with a price trough around $74,000.

Source: Glassnode

Viewed from a different angle, the similarity in this metric between April's dip and the current situation is telling, especially given that Bitcoin's price remains resilient above $100,000. This disparity implies that each successive market correction is establishing higher lows, a classic indicator of an ongoing bull market rather than a shift to a prolonged bear market. In essence, the asset's ability to maintain elevated price levels despite comparable profit-taking pressures suggests strengthening fundamentals and investor conviction. For those analyzing market dynamics, this resilience underscores Bitcoin's maturation as an asset class, where dips are increasingly seen as buying opportunities rather than signals of impending collapse.

New Funds Entering Near 108k Cost Price for Bottom Fishing

Amid last week's downward price movement, evidence has emerged of fresh capital inflows as investors engage in bottom fishing—strategically purchasing assets at perceived undervalued levels. This behavior during a decline often acts as a precursor to price stabilization or even a rebound, as it introduces supportive buying pressure that can counteract selling momentum. Specifically, on October 17, the accumulation of Bitcoin at a cost basis around $108,312 amounted to 104,849 BTC. By October 19, this figure had surged to 137,434 BTC, demonstrating a rapid influx of funds betting on a recovery (as shown in the red bar in the image below).

Source: Glassnode

While this capital inflow is undoubtedly a positive development for Bitcoin, providing liquidity and bolstering sentiment, it is prudent to consider countervailing factors from the options market perspective. Options market makers, who manage risk through gamma exposure—a measure of how option prices change with underlying asset movements—indicate that resistance persists at higher levels. Notably, Bitcoin faces substantial hurdles around the $118,000 mark, where gamma exposure suggests concentrated selling or hedging activity. Surmounting this resistance will likely require additional time and sustained buying interest to erode the overhead supply.

Source: Amberdata

Conclusion

In summary, the 1011 crypto crash, while disruptive, appears to be giving way to new momentum driven by a confluence of geopolitical, political, and on-chain factors. From Trump's TACO re-enactment hinting at reduced trade tensions to Sanae's pro-quantitative easing stance as Japan's new Prime Minister, external influences are aligning to support market recovery. Coupled with Bitcoin's on-chain data—evidenced by reduced open interest, adjusted profit percentages, and fresh capital inflows—these elements paint a picture of a market shedding excesses and preparing for resurgence. Although challenges like resistance at $118,000 remain, the persistence of higher lows and ongoing bull market characteristics suggest that Bitcoin's journey toward or beyond its $126,000 all-time high is far from over. 

Investors should approach this phase with caution, leveraging these insights to make informed decisions in a landscape where opportunity often arises from volatility. As the cryptocurrency sector continues to evolve, staying attuned to these dynamics will be key to navigating future cycles effectively.