Was last week’s taper event a necessary reset for the Bitcoin market? Glassnode weighs in

Glassnode insists the liquidation was necessary as it eliminated excess debt, recalibrated short-term sentiment and reduced speculative positioning.

Friday, October 10 was one of the most memorable days in crypto history. The market witnessed the largest liquidation event amid trade tensions between the US and China. This incident has spread and impacted several parts of the market, including the spot, futures and derivatives segments.

While the event led to huge losses for investors, market research firm Glassnode said believes the deleveraging was a necessary reset for the market.

A necessary reset

As the market witnessed the disappearance of over $19 billion in open interest, futures funding has fallen to levels not seen since the 2022 bear cycle. The leverage was quickly unwound, leading to widespread liquidations and a sharp market reset.

Indicators such as the Bitcoin Relative Strength Index (RSI) and Cumulative Volume Delta (CVD) have shown the magnitude of the reset. The RSI fell 26% from 71.7 to 52.8, indicating a shift from strong bullish momentum to neutrality. Spot CVD fell 3,883.5% from $8.6 million to -$326.9 million.

The RSI shows cooling buying momentum, while spot CVD shows increased selling pressure. The former reflects a moderation in market enthusiasm, while the latter signals growing bearish sentiment as traders anticipate further downside developments.

On the other hand, open interest on futures has shrunk, reflecting a decline in risk in the derivatives markets as investors realize losses. Open interest has fallen from $48.7 billion to $45.1 billion, while financing rates have fallen by more than 51%, from $2.9 million to $1.4 million. Moreover, perpetual CVD has fallen below the low statistical range, indicating intense selling pressure and dominant bearish sentiment.

Trust is slowly rebuilt

Additionally, open interest in the options market has risen 12.9% as traders reposition for new volatility regimes. This increase indicates meaningful market involvement and moderate speculation or hedging activity. Analysts at Glassnode say the modest increase in skew points to renewed demand for downside protection as investors become more cautious.

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These shifts in yields and open rates cleared excess debt, recalibrated short-term sentiment and reduced speculative positioning. Amid the latest developments, the broader market structure has remained intact, with continued flows of Exchange Traded Funds (ETFs) and increased spot trading volumes.

With leveraged participants wiped out, structural capital and institutional demand remain. The market is now in a consolidation phase, with confidence slowly recovering in the spot and derivatives segments.