Bitcoin Market Reset After Leverage Wipe and SOPR Shift

Bitcoin’s recent price action suggests the market may be entering a stabilization phase after a significant leverage flush and cooling trader sentiment. The leading cryptocurrency is holding near $110,000, showing resilience amid a broad reset across derivatives and spot markets. Analysts interpret the latest on-chain data as a healthy correction rather than the beginning of a bearish trend.

Leverage Wipeout Marks Key Turning Point

Over the past few weeks, Bitcoin’s open interest — the total value of outstanding futures contracts — has seen a steep decline. According to data from CryptoQuant, this drop marks one of the largest reductions in leveraged positions in months. The shift indicates that excessive speculative activity has been flushed out of the market.

Leverage wipeouts occur when overextended traders are forced to close their positions, often due to liquidations triggered by sharp price movements. While this process can initially drive volatility, it usually helps stabilize markets in the long term by removing speculative froth.

Since late September, open interest across major exchanges has fallen dramatically, signaling that traders are reducing risk exposure. Historically, such events have preceded more sustainable rallies, as the remaining positions are typically held by stronger hands with lower leverage.

SOPR Shows Signs of Market Maturity

Another encouraging signal comes from the Spent Output Profit Ratio (SOPR), a key on-chain indicator that tracks whether investors are selling at a profit or loss. The metric has hovered near 1.0 in recent days, suggesting that the market has reached a neutral state — traders are neither panic-selling nor aggressively taking profits.

When the SOPR stabilizes around this level, it often marks the end of capitulation phases and the start of accumulation periods. In previous cycles, such conditions have been followed by steady recoveries, as investors regain confidence and begin re-entering the market.

Analyst @CryptosR_Us described the current market phase as a “post-capitulation reset,” where long-term holders are quietly rebuilding their positions. While short-term volatility persists, the broader sentiment is increasingly calm, indicating that speculative pressure has diminished.

Bitcoin Price Holds Firm Near $110,000

Despite short-term fluctuations, Bitcoin has managed to hold steady near the $110,000 level. Over the past week, the asset is down around 4.5%, according to CoinMarketCap data, but the hourly and daily changes remain mild. This stability reflects a more balanced market dynamic, where both buyers and sellers are cautious yet active.

The calm price action stands in contrast to the turbulence seen in October, when Bitcoin experienced sharp swings amid Federal Reserve policy uncertainty and shifts in macroeconomic expectations. Traders now see the current phase as one of consolidation — a necessary pause before the next major move.

Technical analysts point to the $107,000–$113,000 range as a key consolidation zone. A breakout above $113,000 could confirm renewed bullish momentum, while a breakdown below $107,000 might signal further testing of lower supports.

Stablecoin Supply Growth Signals Liquidity Readiness

While derivatives traders reset their positions, another important trend is taking shape: stablecoin supply growth. The total ERC20 stablecoin supply has surged past $158.8 billion, reaching a new all-time high in late October. This increase indicates that large amounts of capital are currently sidelined, waiting for an opportunity to re-enter the market.

Stablecoins, such as USDT, USDC, and DAI, act as liquidity buffers within the crypto ecosystem. When their total supply grows, it often signals investor readiness to move back into risk assets like Bitcoin and Ethereum. This behavior is typically seen before new uptrends begin, as traders convert stablecoins into cryptocurrencies during favorable market conditions.

According to on-chain analysts, the rise in stablecoin balances suggests investors are adopting a “wait-and-see” approach — keeping funds liquid while assessing the next major direction. If Bitcoin maintains stability and sentiment improves, this pool of capital could fuel the next leg of the rally.

Analysts See Reset as Foundation for Next Cycle

Market commentators are viewing the current Bitcoin setup as a structural reset rather than a collapse. With leverage positions reduced, panic selling subdued, and liquidity growing, the conditions resemble previous pre-rally environments seen in past cycles.

Crypto analyst Ali highlighted a potential “broadening top” formation in Bitcoin’s price chart, suggesting two possible paths ahead: a brief breakout to new highs followed by a correction, or a continued consolidation phase before the next upward move. In both cases, analysts agree that the leverage wipe and SOPR stabilization have set a healthier base for future growth.

Institutional traders also appear to be holding steady. Despite the recent volatility, on-chain data shows minimal outflows from major custodial wallets, indicating that large holders are maintaining positions rather than exiting the market. This behavior reinforces the narrative that Bitcoin’s decline is corrective, not structural.

Macro Environment Supports Cautious Optimism

The broader macro backdrop continues to influence Bitcoin’s trajectory. The U.S. Federal Reserve’s recent 25-basis-point rate cut has injected short-term uncertainty, but it also signals a possible pivot toward easier monetary conditions. Lower rates generally benefit risk assets, including cryptocurrencies, by making capital cheaper and encouraging investment.

At the same time, geopolitical tensions and persistent inflation concerns have kept investors interested in Bitcoin’s long-term hedge narrative. As traditional markets face mixed signals, Bitcoin’s role as a decentralized, non-sovereign asset continues to attract both institutional and retail interest.

Outlook: Bitcoin Market Poised for a Healthier Phase

Overall, the current environment paints a picture of a maturing Bitcoin market. The leverage flush-out has removed excessive speculation, the SOPR stabilization reflects calmer investor behavior, and rising stablecoin supply hints at growing liquidity reserves.

While short-term uncertainty remains, many analysts view these conditions as laying the groundwork for the next bullish phase. As long as Bitcoin maintains its footing above key support levels and capital remains on standby, the potential for a medium-term recovery remains strong.

In essence, the market appears to be taking a deep breath after months of volatility — resetting leverage, restoring balance, and preparing for what could be the next significant chapter in Bitcoin’s ongoing evolution.

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