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The recent market drop was not a panic sell-off but a controlled reduction of leverage — deleveraging. CryptoQuant analyst Axel Adler Jr. sees it as a sign of market maturity.
According to him, during the 11 October correction spot trading volume reached $44bn, near cycle highs. Futures volume was $128bn.
Open interest (OI) fell by $14bn, while forced liquidations of bitcoin long positions were just $1bn.
Ninety-three percent of the OI decline was not driven by liquidations — traders closed positions voluntarily and cut risk.
Glassnode added detail. By its count, more than $19bn of open interest was washed out. Funding rates on the futures market plunged to levels last seen in the 2022 bear phase.
Technical indicators confirm the shift in sentiment: buying pressure eased and aggressive selling dominated short-term flows. The drop in futures open interest signals a broad de-risking.
Despite the scale, the market’s structure held up. Spot volumes remain elevated, ETF inflows continue, and on-chain activity remains high.
Experts say this suggests that highly leveraged participants were flushed out, while the capital structure and institutional demand remained intact.
In options, open interest rose as traders rebalanced positions for the new volatility regime. A modest increase in skew points to renewed demand for downside protection.
Glassnode calls it a significant but necessary reset. The market is now entering a consolidation phase defined by caution and a more measured approach to risk across spot and derivatives.
Another CryptoQuant analyst, known as Darkfost, argues that amid “extreme fear” it is time to accumulate altcoins.
In his view, the best entries come when “no one wants them.” He pointed to the share of altcoins on Binance trading above their 200-day moving average.
“Today, only 10% of altcoins on Binance remain above this key metric. In other words, 90% of the market is below its long-term trend, which is a clear sign of pervasive lack of interest,” the expert explained.
He noted that each time in the current cycle the metric fell to similar levels, the market soon posted a notable short-term rebound.
According to Darkfost, there is still time to enter altcoins, but one should choose strong projects that have retained liquidity and on-chain activity. He advised not to wait too long — the market returns to normal quickly.
Lending protocols accrued over $20m in fees, a new all-time high. Weekly trading volume on DEX topped $177bn, also a record.
Total borrowing in cross-chain-lending protocols fell below $50bn for the first time since August. Amid the turmoil, stETH yields briefly topped 7%.
CryptoQuant analyst Maartunn flagged an influx of “stablecoins” to exchanges after the drop.
The $3.2bn inflow was among the largest in the past month. He sees it as traders preparing for potential swings ahead of the US inflation print (CPI).
Change in stablecoin (USDT + USDC, ERC-20) reserves over 30 days:
If CPI undershoots forecasts, that could spur a rally — traders may deploy dry powder into bitcoin and altcoins.
Conversely, if inflation beats expectations, the same funds may stay sidelined, signalling caution and the potential for further declines, Maartunn concluded.
Earlier, Santiment analyst Brian Q said that fear and uncertainty among retail investors remain one of the most accurate signals for accumulating the first cryptocurrency.
