Institutions Buy Bitcoin & Ethereum Dip After Record Liquidation

The cryptocurrency market experienced its largest liquidation event on record, with more than $20 billion in positions liquidated and approximately $1 trillion in market capitalization wiped out within hours. Bitcoin plunged to $102,000 while altcoins collapsed as much as 90%, creating unprecedented market volatility. However, the recovery was equally dramatic, with Bitcoin mounting a strong comeback to $116,000 after rising 3% on Monday, while Ethereum gained 9% over the past day to reach $4,200 at one point.

This massive market movement wasn’t a typical retail-driven dump but represented systemic deleveraging across funds and exchanges, with even stablecoins briefly depegging during the chaos. The event has been framed by analysis firm Bull Theory as a structural purge similar to those seen in March 2020 and mid-2023, where excessive leverage was cleared from the system, ultimately leading to major upcycles in the subsequent periods.

The prompt recovery was largely driven by institutional accumulation of both Bitcoin and Ethereum during the market downturn. CryptoQuant data revealed that Bitcoin’s Coinbase Premium Index reached 0.182 on October 10, marking its highest reading since March 2024 and indicating a surge in institutional buying activity. Typically, this premium contracts or turns negative during sell-offs due to selling pressure from US investors, but the unexpected spike during a price correction pointed to significant accumulation from US-based institutions.

Ethereum showed an even more pronounced institutional interest pattern, with its Coinbase Premium Index soaring to 6.0 on the same day—the highest reading of 2025. This stark divergence between US and global market sentiment underscores the strong long-term conviction held by major players in Ethereum’s future. Large-scale investors viewed the liquidation event not as a crisis but as a prime opportunity to accumulate ETH at lower prices, establishing what appears to be a robust support floor being built by smart money.

This institutional behavior represents a classic case of ‘buying the dip,’ where sophisticated investors exploit market panic and liquidity to build long-term positions. The move suggests that Bitcoin may have found a new support floor near the $110,000 mark, with institutions acting as stabilizing buyers that could obstruct downside pressure and aid in a renewed rally once selling momentum subsides.

The market crash appears to have been triggered by US President Donald Trump’s trade announcement regarding potential tariffs on China. According to Bull Theory’s analysis, two days before Trump’s Truth Social post about the tariffs, one of Bitcoin’s oldest wallets quietly began opening massive short positions on Bitcoin and Ethereum worth billions of dollars. When Trump later confirmed 100% tariffs on all Chinese imports starting November 1, global markets recoiled, with the S&P 500 falling over 2% alongside the crypto market collapse.

The same whale doubled their short exposure 30 minutes before Trump’s official announcement and then closed positions for an estimated $200 million profit—a sequence of moves that appeared deliberate and coordinated. This pre-planned liquidation event, while causing significant short-term pain across markets, may ultimately reset the market for the next bullish leg by clearing excessive leverage and allowing stronger hands to establish positions at more sustainable levels.