Bitcoin Tests $110K Support After Controlled Deleveraging

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Introduction

Bitcoin is battling to hold the critical $110,000 support level following rejection from the $116,000 resistance zone. New analysis reveals Friday’s market crash was characterized by controlled deleveraging rather than forced liquidations, signaling maturing market behavior. The cryptocurrency now faces a pivotal moment that could determine its near-term trajectory.

Key Points

  • Friday's market crash saw $14 billion in open interest decline, but only $1 billion came from BTC long liquidations, indicating controlled risk reduction
  • Bitcoin must hold the $110,000 support zone to avoid a deeper correction toward $105,000-$107,000, with $114,000 as key resistance for recovery
  • Trading volumes surged to cycle highs with spot volume hitting $44 billion and futures volume reaching $128 billion during the volatility event

Market Structure Under Pressure

Bitcoin is currently trading around $110,300, sitting directly on a key support zone after another round of selling pressure hit the market. The cryptocurrency faces a critical test as it struggles to maintain upward momentum following its rejection from the $116,000-$117,500 resistance range. This level previously acted as strong demand during earlier rallies, but has now become a major point of contention between bulls and bears.

The technical picture shows concerning signs of weakness. The 4-hour chart reveals Bitcoin has fallen below both the 50 EMA and 200 EMA, indicating deteriorating short-term structure. The price is now testing horizontal support around $110,000, which aligns with the late September consolidation range. A clean breakdown below this level could expose Bitcoin to further downside, with the next potential support around $106,000-$107,000.

Despite the bearish tone, oversold signals are beginning to appear on lower timeframes, suggesting that a temporary rebound is possible if bulls successfully defend this critical zone. For a sustainable recovery, Bitcoin must reclaim $114,000 and re-establish itself above the short-term moving averages. Until then, the market remains in a fragile equilibrium with bulls defending key support and bears maintaining control of short-term momentum.

The Controlled Deleveraging Phenomenon

Top analyst Axel Adler’s recent data analysis sheds new light on the magnitude of Friday’s market event, revealing an important yet underappreciated aspect of Bitcoin’s maturity. According to his findings, spot trading volume surged to $44 billion, nearing cycle highs, while futures volume hit $128 billion during the volatility spike. More notably, open interest declined by $14 billion, yet only $1 billion of that was from BTC long liquidations.

Adler explains this was a controlled deleveraging event, not a liquidation cascade, suggesting that market participants reduced risk manually rather than being forced out. The data shows that 93% of the $14 billion decline in open interest during Friday’s sell-off wasn’t forced, meaning it wasn’t the result of automatic liquidations. Instead, traders and institutions chose to reduce leverage manually, closing positions to protect capital.

This behavior marks a significant turning point in Bitcoin’s market structure. It indicates that participants, especially institutional players, are managing risk more prudently, reinforcing a more stable and mature trading environment. In past cycles, sharp liquidations often caused extreme volatility that magnified losses across the board. This time, however, the market handled unprecedented stress with relative discipline.

Market Sentiment and Future Outlook

The market remains fragile following the historic volatility from Friday’s crash, which erased billions in leveraged positions and triggered widespread uncertainty. While the price has managed to stabilize above key moving averages for now, momentum appears to be weakening as buyers struggle to absorb continued selling pressure. Some analysts warn that if Bitcoin fails to hold this zone, a deeper correction toward the $105,000-$107,000 region could follow.

Despite the signs of structural maturity through controlled deleveraging, the emotional landscape has shifted dramatically. As Bitcoin loses value and hovers near the $110,000-$112,000 support zone, fear is spreading across the market. Many short-term traders are exiting positions, while long-term holders are reassessing exposure amid rising uncertainty. Adler notes that this phase, where fear peaks and confidence wanes, often defines the next market direction.

The next few sessions will be decisive for Bitcoin’s direction. If demand returns at these levels, Bitcoin could confirm a healthy reset before the next rally. However, failure to hold support may test investors’ conviction, potentially pushing BTC into a deeper corrective phase before broader accumulation resumes. The market now watches closely to see if this controlled deleveraging event represents a maturation milestone or merely a pause before further downside.

Related Tags: Bitcoin
Other Tags: Axel Adler
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