According to Woofun AI, the crypto market recently experienced severe turbulence, with BTC briefly breaking below the $81,000 support level to touch $80,400 before rebounding above $82,000 and currently trading around $82,500, while ETH was not spared either, falling to near $2,400 before stabilizing just below $2,500.

This turmoil triggered liquidations for approximately 180,000 traders across the market, with total liquidation amounts approaching $1.1 billion, of which long positions accounted for $935 million, instantly spreading panic sentiment throughout the market.

This sharp decline did not come out of nowhere but resulted from the resonance of multiple selling forces, including asset transfers by the U.S. government, position swaps by a major mining pool figure, and panic selling by short-term holders, collectively forming the core contradiction in the current market.

Despite the severe short-term volatility, from a medium-to-long-term perspective, the Q4 market is still expected to maintain its upward trend, with the current adjustment viewed more as price repair and stock-game competition within the bull market process.

Notably, this decline exposed the market's fragility under conditions of liquidity depletion while also revealing the differentiated response strategies of various capital entities under extreme market conditions, providing an important observation window for future trends.

From a liquidity structure perspective, the market is sinking into the deep waters of a stock-game competition, with new buying power clearly insufficient.

A recent Glassnode report revealed a key data point: the average daily trading volume of exchange BTC spot and BTC ETFs over the past 7 days was approximately $6.8 billion, below levels seen during about 90% of periods since January 2024, indicating a significant decline in market trading activity.

The deeper issue lies in the supply-demand imbalance — in the 30 days ending October 5, the crypto market's realized market cap was approximately $12.8 billion, yet combined purchases from ETFs, stablecoins, and corporate reserves amounted to only about $4.9 billion.

This means the previous market rally was not driven by strong new demand but relied mainly on existing capital exchanging chips at higher prices.

This "price-for-volume" model makes the market foundation unstable, and once external selling pressure hits, it easily triggers chain reactions.

Data compiled by Woofun AI shows that while this internal circulation of existing capital can push prices up in the short term, it also accumulates enormous correction risk, because without solid external capital inflow support, any disturbance could cause the bullish defense line to collapse.

Therefore, the current market rally is more of a fragile balance than a strong trend establishment, and investors need to be wary of the potential impact of liquidity depletion.

The primary source of selling pressure is the U.S. government's asset transfer behavior, whose panic-inducing effects on the market cannot be ignored.

Over the past 3 days, the U.S. government deposited 17,733 BTC worth $1.48 billion into Coinbase Prime (COIN.US), while also depositing 750 WBTC worth $62 million.

During this period, BTC price fell 6.9%, showing the market's sensitive reaction to this action.

Although Coinbase Prime (COIN.US) serves both custody and trading functions, and the U.S. government's transfer does not necessarily mean immediate selling, market interpretation tends to lean toward the worst-case scenario.

Woofun AI monitoring shows the U.S. government currently holds approximately 319,100 BTC, of which about 71% comes from Lubian-related BTC and Bitfinex recovery funds, and the assets transferred this time are widely believed to be seized assets.

This large-scale capital movement has made the crypto market extremely jittery, with panic-driven declines following.

Investors worry the government might dump these assets onto the market at any time, creating enormous supply pressure.

This uncertainty has amplified market volatility, forcing long position holders to reduce exposure preemptively to avoid risk, further magnifying the decline.

The U.S. government's move is not just a simple asset transfer but a major test of market psychology, and its subsequent impact will continue to unfold.

Another major selling force is the position swap by mining pool figure Wang Chun, whose large transactions directly impacted market sentiment.

F2Pool co-founder Wang Chun's address (0xF42...2b51) sold 235.5 WBTC worth $19.31 million on-chain after BTC's early morning decline, exchanging them for 7,848.5 ETH.

At the time, ETH was priced at $2,460, with an ETH/BTC exchange rate of 0.03.

This operation indicates that some industry insiders are shifting from BTC to ETH, possibly out of optimism about ETH's relative value or caution about BTC's short-term trajectory.

As a well-known mining pool co-founder, Wang Chun's moves carry benchmark significance, and his large sell-off exacerbated bearish sentiment.

Especially against the backdrop of BTC already declining, this position swap was interpreted by the market as a risk-aversion signal, further undermining bullish confidence.

Additionally, this transaction reflects the reallocation of internal market capital across different assets, demonstrating investors' adjustment of risk preferences.

Although Wang Chun's operation was relatively smaller in dollar terms compared to the U.S. government's, its symbolic significance is enormous, triggering follow-on selling by other investors and accelerating the market decline.

Such risk-aversion behavior by industry leaders often signals that the market may face greater adjustment pressure in the short term.

Panic selling by short-term holders (STH) was the third major driver of this decline, with selling pressure hitting a near 4-month high.

CryptoQuant analyst Darkfost noted that Bitcoin short-term holders showed clear panic sentiment.

In the past 24 hours, short-term holders transferred over 50,000 BTC to exchanges at peak daily levels, with over 29,500 BTC transferred at a loss, accounting for approximately 59% of total BTC inflows.

This was the largest realized loss by short-term holders in nearly 4 months, demonstrating retail investors' irrational behavior during price declines.

Although BTC price was stable around $82,000 at the time, it subsequently plunged to around $80,500 overnight, showing that short-term holder selling still has a lagging impact on the market.

This panic selling often occurs after prices have already fallen, further intensifying downward pressure.

Short-term holders typically lack the patience and confidence for long-term holding, and once prices fluctuate, they easily fall into panic and choose to cut losses.

This behavior not only amplifies market volatility but also renders the price discovery mechanism ineffective, causing market overselling.

Therefore, short-term holder behavior is an important indicator of market sentiment, and the easing of their panic level will be a key signal for market stabilization.

From a medium-to-long-term trend perspective, the market is in a price repair phase, with long-term selling pressure significantly weakened and demand recovery signals gradually emerging.

On October 5, Glassnode stated that the trend of BTC whales making net deposits to exchanges has stopped — a trend that lasted over three months since summer, twice as long as other similar trends since 2023, ending in late August, after which capital flows have remained negative.

This means BTC whales' selling spree has come to an end, and long-term holders still choose to side with time.

Meanwhile, CryptoQuant noted that Bitcoin miners have recently stopped large-scale selling.

Since Bitcoin hit a low of $76,000 on August 21 and miners' status shifted from "extremely underpaid" to "reasonably paid," no extreme miner capital outflows have occurred.

Miner selling pressure was once an important supply source persistently affecting Bitcoin prices during the 2026 bear market, and the disappearance of this steady selling pressure may help alleviate market supply pressure.

Additionally, BTC spot demand has improved significantly, and the market has passed the risk extreme.

Currently, total Bitcoin demand has returned to positive territory, exceeding 14,000 BTC, while futures demand remains relatively stable at an average of approximately 32,000 BTC recently.

Spot demand currently stands at approximately negative 17,000 BTC — still in negative territory but a substantial improvement from negative 207,000 BTC on September 20.

These data indicate that supply pressure at the market bottom is easing and demand is gradually recovering, laying the foundation for Q4's upward trend.

The distribution of liquidation bands and divergent bull-bear views reveal potential future risks and opportunities in the market.

On October 7, Glassnode reported that based on a two-month liquidation heatmap, only about 17% of liquidation price levels are above the current price, and support levels near BTC price expanded by about half within a week.

The nearest large-scale liquidation price band is located just below BTC price, between $81,700 and $83,300; the second liquidation level is near $75,000; and the largest liquidation band is in the $60,000 to $63,000 range.

If BTC price falls further into these ranges, forced liquidation of long positions could further exacerbate the market decline.

Regarding market direction, views are significantly divided.

On October 7, Fidelity Digital Assets Research Vice President Chris Kuiper argued that "the bear market may not be over," with November being a critical window, referencing the historical cycle of November 2022.

TD Cowen raised its forecast, expecting BTC to reach approximately $109,000 by the end of 2026 and rise to $280,000 by 2029.

On October 6, Darkfost noted the bull market score index was 80/100, but spot demand remains the missing key factor.

In early October, trader Ansem was bullish on assets like SOL, believing the market is in an early bull market phase.

Trader Killa, after stopping losses on a 10x long position at $87,000, is watching the $80,000 to $82,000 range, still holding BTC long positions at $62,600 and $76,400, emphasizing risk management.

These views reflect the coexistence of caution and optimism amid uncertainty, and investors need to formulate strategies based on their own risk preferences.

Traders' specific strategies and operational guidance for the future provide investors with a practical reference framework.

Whale "Set Ten Big Goals First" noted that recent macro headwinds including rising U.S. Treasury yields, strengthened rate hike expectations, and rising oil prices emerged in concentration, yet BTC only corrected about 5%, showing market resilience.

He set stop-loss conditions: if BTC falls below $79,000, he will begin reducing positions; if the daily close falls below $78,000, he will close all remaining long positions.

Yi Lihua leans toward BTC falling below $79,000, believing the correction is not over, with the next support at $75,000.

He adheres to the principle of "watching for corrections in a bull market but not shorting," considering the $86,000 pullback as normal fluctuation and patiently waiting for the correction to complete before buying the dip.

These strategies emphasize the importance of risk control while also reflecting market confidence in the long-term bull market trend.

In the current market environment, investors should avoid blindly chasing rallies or panic selling, instead formulating clear stop-loss and take-profit plans based on key price levels.

At the same time, pay attention to the interaction between macro factors and market sentiment, flexibly adjusting positions to cope with potential volatility.

Overall, while the Q4 market faces challenges, the long-term upward logic remains unchanged, and investors should remain patient and seize structural opportunities.