Nearly a year after one of the most violent selloffs in crypto history triggered roughly $19 billion in liquidations, analysts warn that the risks behind the crash — runaway leverage and crowded trades — remain firmly in place.

The Oct. 10, 2025 flash crash saw bitcoin (BTC) plunge from around $122,000 to $105,000, with much of the decline occurring within minutes, just days after the asset had hit a record high above $126,000. Liquidations — the forced closure of leveraged positions once losses consume a trader's collateral — turned that swift drop into a cascade that wiped out billions in leveraged bets across crypto markets, catching traders off guard after months of positioning for further gains. Bitcoin was changing hands at $84,155.39 at the time of writing, still well below the record set in the run-up to last year's crash.

But while the selloff shook confidence in the market, the conditions that helped cause it have not gone away. Leveraged trading and crowded bets continue to drive bitcoin's short-term price moves, even as traders gain better tools to track market risks. Nearly a year on, the question hanging over the market is whether traders have learned enough to prevent another such event.

"It just was a very quick and violent market top that we did not expect," said Mark Connors of Risk Dimensions, who previously ran a hedge fund positioning product at Credit Suisse. "Positioning was important then, and it's important today," he said in an interview.

A Market Primed for a Fall

Coming into the crash, open interest stood near historic highs, and traders had piled into bullish positions, betting that bitcoin would follow its familiar four-year cycle toward fresh records.

"People were keenly aware, like me, they were bulled up because it was 'go' time," Connors said. "We were going to go to that $250,000 to $300,000, $400,000 level using previous cycles."

Instead, the market turned against them. In Connors' view, the reversal was driven not by activity on blockchain networks but by derivatives trading.

"The movement was obviously not onchain data. I mean, it was all derivatives," he said. "So paper bitcoin again is alive and well and governs the near term."

The lesson, he argues, is that bitcoin's price can be driven as much by leveraged bets as by genuine demand for the asset itself. That has not changed much in the past year. Perpetual futures, which allow traders to speculate on price moves without owning bitcoin, remain a major part of crypto trading, and exchanges have strong financial incentives to keep offering leveraged products — one reason the near-term price of bitcoin continues to be set on derivatives venues rather than in the spot market.

Better Tools, Same Underlying Risks

Traders may nonetheless be better equipped to navigate those risks than they were a year ago.

"The data is getting better at defining what the market structure is," Connors argued, pointing to improved visibility into order books and positioning. "More information means greater certainty, less volatility."

Chris Sullivan, co-founder of Hyperion Decimus, said traders can take concrete steps to protect themselves from the kind of losses seen last October. His advice starts with avoiding leverage and keeping a close eye on open interest, funding rates and market sentiment. Open interest tracks the of outstanding derivatives contracts, while funding rates reflect the cost of holding positions in perpetual futures. Together, the two metrics can help traders spot when the market is leaning too far in one direction — the kind of one-sided positioning that preceded last year's crash, and the gauges analysts say remain worth watching for as long as leveraged products persist.

Sullivan also urged patience when those measures reach extremes, whether traders are betting on rising or falling prices. For long-term bitcoin holders, he recommended buying the asset, moving it off exchanges and holding it in self-custody rather than leaving it on a trading platform — a step that removes the need to rely on a platform's custody and solvency.

That does not mean another crash is off the table.

"There's still a chance that you can have an October 10th for sure," Connors warned. "The levered products have not gone away."

A Four-Year Cycle Under Review

The crash also challenged one of bitcoin's most widely held assumptions: that its four-year cycle, tied to the halving — the event, occurring roughly every four years, that cuts the new bitcoin supply awarded to miners — could serve as a reliable guide to future prices.

"We all, including me, got caught offside," Connors said. "The four-year cycle is not dead; it has changed, and we can't rely on it for as much signal as we have in the past."

He now believes economic and political forces may play a larger role in bitcoin's cycles than investors once thought. Meanwhile, the growth of institutional investment products has done little to displace the derivatives market's influence over short-term prices.

For all the changes since October 2025, Connors sees one important distinction between the crash and its aftermath.

"I think year later, we learned to be more attentive to market structure," he said.

And despite the damage, bitcoin's market survived.

"The market did bend; it didn't break."

Based on reporting by CoinDesk. Original article: Bitcoin's $19 billion wake-up call: One year after flash crash, has crypto learned anything?