- •The crypto market crash follows a four‑phase recovery: panic sell‑off, data stabilization, liquidity return, and renewed confidence.
- •Market makers shrink liquidity but keep markets active, while institutions absorb forced sales to stabilize prices.
- •Recovery clears leverage, rebuilds trust, and opens new long‑term opportunities for patient investors.
On October 11, 2025, the crypto market had another “night of fear.” A sudden global risk event sparked panic. Bitcoin (BTC) fell more than 8% from its high and briefly touched the $102,000 level. Ethereum (ETH) dropped below $3,400. Altcoins like XRP and DOGE were hit hard, falling 15%–30%. Some assets touched their lowest levels in more than a year.
According to Coinglass, total liquidations on global exchanges jumped to a record $19 billion. About 95% were long positions. Total market cap lost more than $1.25 trillion. This was not a simple pullback. It was a full leverage washout that showed how leveraged and interconnected crypto has become.
Recovery does not happen in one step. It often follows a classic multi‑stage path: from early “bleeding” to a final bottom. This framework comes from Zaheer Ebtikar, CIO of Split Capital. He divides the process into four stages—market sell‑off, data stabilization, market stabilization, and market bottoming.
The model is based on past crashes (such as the 2022 FTX collapse and the March 2020 COVID crash). It highlights the role of market makers, liquidation chains, and the weekend liquidity bottleneck.
PHASE ONE: MARKET SELL‑OFF AND LIQUIDITY CONTRACTION
The opening act is the most violent. A shock event triggers global risk aversion. Stocks fall. Crypto collapses like dominoes. Liquidations flood into exchanges such as Binance and OKX and push prices down faster—Bitcoin drops from $118,000 to $102,000. XRP falls to $0.45 (a multi‑month low). DOGE falls sharply as well.
In this turmoil, market makers—firms that provide continuous quotes and liquidity (such as Jump Trading, Wintermute, and Jane Street Crypto)—do not “leave the market.” They shrink their liquidity in a dynamic way. They widen bid‑ask spreads, reduce order sizes, and adjust hedges in real time to stay risk‑neutral. This is risk control, not a retreat. As Ebtikar puts it, “Liquidity does not disappear; it just costs more to get.”
When volatility is high, arbitrage systems also trigger. If spot and perpetual futures diverge, market makers run convergence arbitrage (buy spot and sell futures) and earn from the spread. This does not “block a rebound.” It helps prices move back to fair value. In the short run it may absorb some buying power, so the bounce can look slower.
At the same time, forced liquidations of levered longs make panic worse. In one hour, liquidations can reach $7.5 billion, more than the peak during the 2022 Terra collapse. This “bleeding” phase usually lasts for hours until leverage is flushed out and basic liquidity returns.
PHASE TWO: DATA STABILIZATION AND INSTITUTIONAL ACCUMULATION
Crash peaks often come with tech stress: exchange API delays, heavy slippage in order books, and even brief stablecoin de‑pegs (for example, USDT to 0.98). Some traders are “flying blind.” But large market makers usually have multiple data feeds and backup nodes. Their systems switch sources and reweight models. Small quant teams and retail tools are the ones that truly stall.
When data stabilizes, the market moves into an accumulation mode. Order books are full of forced selling. These liquidations often fill at very low prices. That is a sweet spot for well‑funded buyers.
Market makers and whale buyers (such as Grayscale, MicroStrategy, or some funds) switch on automated buy programs. They take the other side of these passive sell orders in batches to capture the discount. Glassnode data shows that over the last 24 hours, more than 100,000 BTC moved into cold wallets. This points to long‑term accumulation.
At the same time, the weekend effect appears. U.S. equities are closed, so spot ETFs (like BlackRock’s IBIT) cannot operate. Cross‑market liquidity from institutions drops by around 40%–50%. This slows the pace of absorption. The stabilization phase stretches over several days. It also gives patient long‑term investors a rare “low‑price window.”
PHASE THREE: MARKET STABILIZATION AND INVENTORY ADJUSTMENT
When data and liquidity recover, the market enters a digestion phase. The lead shifts from panicked retail to professional traders. After building positions at the lows, they adjust their portfolios to restore neutrality.
Ebtikar calls this inventory rebalancing. Market makers tune both spot and derivatives positions at the same time to reduce volatility exposure. Prices move toward balance step by step. On charts you often see a slow, steady climb—sometimes called the “Dalai Lama curve,” a gentle and persistent rise.
But weekend liquidity is still thin. Spot ETFs and some institutional arbitrage paths remain shut. So the rebound looks “soft and choppy.” Bitcoin may hover around $110,000 for days. Altcoin rebounds are often only 20%–30% of the drop.
History suggests this phase lasts 2–5 days, depending on the depth of the prior liquidations and the speed of capital returning. In May 2021, this phase cleared more than 80% of leverage and set the stage for a multi‑month rally.
PHASE FOUR: MARKET BOTTOMING AND CONFIDENCE RETURN
At last, the market finds an anchor zone. Bitcoin may build a base around $105,000–$108,000. Major altcoins stabilize with it. With panic washed out, attention returns to fundamentals and macro drivers.
On‑chain data shows rising Bitcoin outflows from exchanges (a net 50,000 BTC in the last 24 hours). HODLers are adding to positions. Moving coins from exchanges to cold wallets is a classic bottom signal.
Social sentiment turns cautiously optimistic. Some money returns to undervalued assets. Analysts and media revive the word “Uptober,” hinting at a turn in October.
But Ebtikar’s framework also warns us: If macro risk does not ease (for example, geopolitical tension or higher rates), a second shock is possible. True recovery needs both technical repair and a rebuild of confidence and healthy leverage.
CONCLUSION: THE FIRE OF PURIFICATION—OPPORTUNITIES AND WARNINGS
This crash, triggered by a sudden risk event, was painful. But it also purified the market. It cleared excess leverage, exposed the risk of liquidity dependence, and reminded investors how macro forces can amplify moves in crypto.
Ebtikar’s four‑stage framework tells us: Recovery is a process you can map, not a bet on feelings. For investors:
- •Short term: watch data and liquidity signals.
- •Medium term: consider adding quality assets cleaned by the leverage washout (such as BTC and ETH).
- •Long term: keep an eye on macro conditions and beware of “false rebounds.”
Stay calm in uncertainty. That is how you catch the next real “Uptober” dawn. History shows us one thing: after every great fire comes a new beginning.
〈How Does the Crypto Market Recover After a Crash?〉這篇文章最早發佈於《CoinRank》。