Bitcoin’s failure to recover $90,000 exposes deep structural cracks that could trap investors during the next unwind

Bitcoin's inability to recover $90,000 looks more like a market plumbing test than a narrative argument.

For much of 2025, the surface story was organic momentum. The United States moved toward creating viable regulatory boundaries, capped by President Donald Trump's signing of the GENIUS Act to federalize payment stablecoins.

At the same time, Spot Bitcoin ETFs normalized exposure within the securities trading channel, and the broader crypto economy traded as if it had finally graduated to the mainstream of the asset class.

As a result, Bitcoin rose to an all-time high of $126,223 in early October.

However, by October 10, violent unwinding had wiped out approximately $20 billion in leveraged positions across crypto exchanges, deteriorating the microstructure. This caused the price of BTC to fall by 30% from its 2025 high, giving the asset its first Red October in years.

Since then, the Bitcoin market has been in decline thanks to dilution of liquidity, reduced trading volumes, and rebound selling by large holders.

These dynamics go a long way toward explaining why Bitcoin is currently struggling below $90,000, rather than treating that level as a waypoint to new highs.

October 10th Hangover

The liquidation event was important because it fundamentally changed the risk appetite of marginal liquidity providers.

In deep markets, volatility is painful, but trading is possible. Market makers estimate size around mid-prices, and arbitrage desks keep venues aligned and eliminate large flows without forcing price differences.

After October 10th, the incentives reversed. Dealers tightened risk limits and the market opened with significantly reduced shock absorption.

Its fragility is evident when looking at the behavior of larger holders. crypto slate We previously reported that even after the leverage purge, BTC whales continued to offload top cryptocurrencies, thereby dampening market momentum.

Moreover, market changes are also evident in the data on Bitcoin volume and depth.

CoinDesk Data's November Exchange Review shows that activity on centralized exchanges has retreated to its lowest level since June.

According to the company, the total trading volume of spot and derivatives across centralized exchanges decreased by 24.7% month-on-month to $7.74 trillion, the largest monthly decline since April 2024.

Spot trading volume decreased by 21.1% to $2.13 trillion, and derivative trading volume decreased by 26.0% to $5.61 trillion. In particular, the derivatives market share fell to 72.5%, the lowest level since February 2025.

Markets can command high prices even on low volumes, but things change quickly when participants need to resize.

depth is decreasing

The clearest warning signal for Bitcoin is its current market depth, which measures visible buying and selling interest around the mid-price.

This is where the “trillion dollar fantasy” takes shape. Market capitalization is just a market value calculation. Liquidity is the ability to turn intentions into actions without paying the hidden taxes of slippage.

Institutional strategies, scheduled rebalancing, and hedging without slippage shocks are possible when order books are thick and spreads are predictable. Compounding liquidity: Dense flows lead to tighter quotes from market makers, reducing costs and drawing in more participants.

But the opposite is self-actualization. Thin liquidity increases transaction costs, forces participants to exit, and ensures that the next shock will leave deep scars.

According to Kaiko data, Bitcoin's market depth totaled 2%, down about 30% from its 2025 high. In practical terms, this is the difference between a market that can absorb fund rebalancing dramatically and a market that creates gaps between levels when the same flows occur.

A snapshot of Binance, the largest cryptocurrency exchange by trading volume, illustrates this point.

According to Kaiko, the market depth of the BTC pair 0.1% and 1% have both increased significantly over the past few years, surpassing their pre-crash highs in 2022.

As of October 2025, the last time Bitcoin reached its all-time high, Binance had a market depth of over $600 million at 1%.

Since then, that depth has fallen to less than $400 million as of press time.

While Binance is not a comprehensive agency for global liquidity, it serves as a useful bellwether of the health of its visible order book.

But the world's leading venue showing a thin book near the midpoint explains why rallies stall the moment momentum traders encounter an actual selloff.

ETF flows and off-exchange liquidity migration

The second structural change concerns where liquidity resides, especially as ETF complexes mature.

Investors have withdrawn more than $5 billion from U.S.-listed spot Bitcoin ETFs since October 10, according to SosoValue data.

In deeper tapes, demand shocks of that magnitude are gradually absorbed. When markets are thin, it creates a “push-pull” dynamic where prices stall in round numbers because all gains hit a wall of redemptions, profit taking, and whale distributions.

Meanwhile, regulatory piping changes have further changed the way flow enters and exits the system. In July, the SEC voted to allow in-kind issuance and redemption of crypto ETP shares, a move aimed at aligning these products with commodity ETPs.

Operationally, in-kind flexibility gives authorized participants (APs) more options for sourcing and distributing Bitcoin, including through internal inventory, OTC counterparties, and prime broker channels.

While this reduces friction under normal circumstances, it reinforces a broader trend in which liquidity is becoming increasingly internalized from visible exchange order books.

This transition explains the current paradox. Even though Bitcoin remains a huge institutionally held asset, it still feels mechanically fragile.

Private liquidity is not obliged to display itself in times of panic. In times of stress, the spread increases, the scale decreases, and activity bounces back into the public sphere just when the public layer is at its weakest.