by Coinstrooper Crypto Articles
Quick Take
  • Melker wrote on Tuesday that despite expecting “October to be deep in the red” after the historic liquidation, the market’s resilience changed his outlook.
  • “I don’t think we’re entering a bear market,” he stated, noting, “this isn’t 2017.
  • The liquidation forced a repricing of risk as Bitcoin fell 7% and Ethereum dropped 12%.
  • Gold’s rally past $4,100 supports Melker’s argument that “investors aren’t panicking, they’re reallocating.”

What Happened

Gold’s rally past $4,100 supports Melker’s argument that “investors aren’t panicking, they’re reallocating.”

In previous cycles during 2017 and 2021, NUPL readings above 0.5 signaled most investors were in profit, driving speculative activity before corrections.

XwinFinance analysts noted “the key signal to watch next will be a decline in STH share, which would mark the start of a renewed accumulation phase led by long-term investors.“

Market Context

Melker wrote on Tuesday that despite expecting “October to be deep in the red” after the historic liquidation, the market’s resilience changed his outlook.

“I don’t think we’re entering a bear market,” he stated, noting, “this isn’t 2017. Nor is it 2021. What happened last week was purely structural.“

On-chain data reveal that 97% of the circulating supply is in profit, with short-term holders accounting for 44% of realized capitalization, the highest level ever recorded.

Bitcoin Market Enters Speculative Phase as New Whales Dominate

According to the analyst, short-term holders now control 44% of Bitcoin’s realized capitalization while long-term holders realize profits, transferring dominance to “new whales.”

This shift typically coincides with the final expansion phase of bull markets.

However, ETF inflows, expanding stablecoin liquidity, and institutional participation are effectively absorbing sell pressure.

According to CryptoQuants’ October 14 report, the stablecoin market capitalization rose by $14.9 billion over 60 days, the fastest pace since January, providing capital capacity to support the recovery.

Melker emphasized that infrastructure development continues regardless of volatility.

“Public companies are adding BTC to balance sheets. Luxembourg just made Eurozone history. CME is prepping for 24/7 trading. States are preparing to buy Bitcoin.“

This perspective acknowledges elevated prices while rejecting the assumption of inevitable correction.

Why It Matters

The liquidation forced a repricing of risk as Bitcoin fell 7% and Ethereum dropped 12%.

Details

Bitcoin survived crypto’s largest liquidation event in history with October (Uptober) still holding positive territory, prompting analyst Scott Melker to call it “a small miracle.”

The $21 billion deleveraging event wiped out leveraged positions across the top 100 assets, yet Bitcoin trades around $113,000 after briefly touching $102,000 during Friday’s crash triggered by escalating U.S.-China trade tensions.

According to a CryptoQuant analyst, Bitcoin’s Net Unrealized Profit/Loss (NUPL) currently stands at +0.52, a zone historically associated with the shift from optimism to euphoria.

Bitcoin’s Bull Score Index dropped from 80 to 20 following the liquidation, while Apparent Demand shows a 30-day decline of 111,000 BTC, which is the steepest since April.

Despite weakened fundamentals, whale accumulation remains strong, with 1-year holdings change crossing above its moving average on October 8.

Infrastructure Expansion Supports Bull Case Despite Structural Weakness

He quoted Howard Marks: “Valuations are high but not crazy. Expensive and going down tomorrow are not synonymous.”

Bitcoin broke above $114,000 to $117,000, reaching $126,000 before the liquidation, driven by record ETF inflows of over $2.2 billion.

The breakout flipped 190,000 BTC into support, providing structural depth.