Bitcoin's Brutal Shakeout: Two Critical Levels I'm Watching Now
Hey everyone. What started as a routine weekend turned into far more than a simple market update. I need to walk through what happened and explain the defensive moves I’ve already made to protect positions.
I was out eating on Friday and everything happened so quickly that I couldn’t do anything about it in real time. By the time I checked markets late in the evening, the damage was already done. What I found was genuinely shocking. Bitcoin just experienced its first $20,000 decline in a single move, marking the biggest liquidation event in its entire history and wiping out $250 billion from the crypto market. While Bitcoin’s price action isn’t catastrophic relative to that scale, the altcoin destruction is absolutely horrendous.
I’ve already sold some altcoins where their structure is completely broken and moved into more solid, less risky plays to keep my exposure to crypto. Let me explain why I made these moves and what I’m watching now.
Understanding the Damage
This feels like a black swan event without an actual black swan. There’s simply no justifiable reason for the carnage we saw in altcoins.
Yes, Trump made an announcement.
Yes, the stock market dropped 2.7%.
But none of that explains why certain altcoins collapsed by 30, 40, even 50 to 60 percent.
Bitcoin and crypto have been underperforming equity markets for weeks. That makes this selloff even more puzzling. Obviously too many traders were heavily leveraged, and it triggered a massive liquidation event. People got too greedy and overconfident, buying on leverage instead of taking spot positions. We had already shaken out weak hands back in late September, but traders quickly loaded up on leverage again, thinking this time would be different. That confidence turned into their downfall when the selling started and liquidations cascaded through the market.
Shifting My Outlook
I don’t want to lose my bullish bias completely, but I cannot ignore this level of damage. There’s a real possibility this spills over again. We’ve seen individual traders on X get liquidated for tens of millions of dollars. If that’s happening publicly, imagine how many funds have blown up privately.
Many of these funds are run by degens themselves. When they implode, they have to sell their spot positions to recover. That creates a cascading effect. My main concern is that altcoins will continue bleeding and potentially retest those horrible wick lows.
The Technical Breakdown
Let me walk through some specific examples.
AVAX touched $8 from $26.
SUI started the day at $3.5 and fell to $0.5.
ENA dropped from 60 cents to 15 cents.
I’m not predicting we revisit that exact low, but these technical breakdowns are too significant to ignore.
These altcoins were already weakening before the crash, but these new breakdowns change everything. It makes it hard to justify holding these positions.
My Defensive Rotation
Here’s what I’ve done: I’ve rotated out of AVAX, HYPE, PENGU and EIGEN, and moved that capital into Bitcoin, Ethereum and BNB. I still hold other ones like TRX and XRP because I’m waiting for the weekly close.
Last time I mentioned Bitcoin dominance might jump back to 61 percent. That spike to 64 percent, even though short-lived, reveals serious cracks in this market. Altcoins in this environment simply don’t have the attention, capital, or liquidity.
This could be a major shakeout before everything runs higher. But I can’t ignore the warning signs. Since most of my allocation decisions center on the Bitcoin outlook, I don’t want to be caught in a situation where Bitcoin drops another modest amount but my altcoin positions crater another 30 percent.
Making this rotation now means I can focus on what Bitcoin does over the coming days and whether it confirms a major breakdown.
Critical Levels to Watch
For Bitcoin, the question is whether this was a final thrust high to trap everyone. Many people got heavily leveraged right at the top. I saw it all over X. People got extremely bullish, expecting a surge to new highs in the coming months.
Obviously I was bullish too, but many took it too far with leverage.
Now we need to see if the market is healthy enough for spot buyers and smart capital to step in, or if this marks the start of a major decline.
I’m watching the last higher low at around $108k extremely closely. This is a critical level. If Bitcoin breaks below $108k, I will trim even more positions. That’s my first line in the sand for further risk reduction.
But here’s the major warning level: if Bitcoin breaks below 100k, which sits at the 50 week moving average, it confirms the market has entered a bear market. At that point, I’ll have to close a big portion of my Bitcoin position as well.
The focus now is preserving capital and risk management while maintaining enough exposure to see how Bitcoin resolves this type of price action.
The Breeding Ground for a Big Move
I don’t want to be all doom and gloom here. While I’m respecting the downside risks that have emerged, this is also the breeding ground for a significant move. We’ve seen complete closure of all leverage positions and total destruction of sentiment. Markets can rally powerfully from these conditions.
Right now, I want to see buying pressure return. I want to see price recover and push through resistance. If that happens, we’ll probably be in decent shape. This would leave many people behind, sentiment would be crushed, and a major move higher could emerge from exactly this type of setup.
Stay safe out there, and let’s see how this develops.
Thanks for reading.
Timothy Assi
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Written by Timothy Assi, an Elite Popular Investor on eToro.
Not investment advice. eToro is a multi-asset investment platform. Your capital is at risk. For information and educational purposes only.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
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