Bitcoin News Today: Bitcoin's $120K Defense: Leverage Reset or Bullish Setup?

Bitcoin's recent price volatility has triggered a leverage reset, with over $1.74 billion in liquidations reported across four days as the market grapples with elevated open interest (OI) and speculative positioning TheCryptoBasic^[1]. The cryptocurrency's price has oscillated between $119,700 and $124,000 in recent sessions, with analysts noting that the $120,000 level has emerged as a critical support zone after multiple rejections earlier this year Coinotag^[5]. This consolidation phase, driven by sharp price swings, has forced traders to rebalance leveraged positions, potentially setting the stage for a renewed rally if the support holds TheCryptoBasic^[1].

Data from on-chain analytics firm Glassnode indicates that Bitcoin futures OI remains near record highs, having risen from 370,000 contracts on October 1 to 397,500 by October 7 TheCryptoBasic^[1]. While this reflects sustained leverage appetite, it also amplifies systemic risk, as high OI can exacerbate volatility during directional moves. CoinGlass data corroborates this, reporting $90.24 billion in aggregate futures OI as of October 10, down slightly from a peak of $94.12 billion but still elevated compared to historical trends TheCryptoBasic^[1]. Analyst Lark Davis argues that Bitcoin's ability to hold above $120,000 since October 2 signals base-building, with potential for a move toward $130,000 if momentum sustains Coinotag^[5].

The recent flash crash on October 10, which saw Bitcoin drop to $101,500 before rebounding to $112,500, highlighted the fragility of leveraged positions in a market dominated by algorithmic trading CryptoSlate^[4]. The event erased $7 billion in liquidated positions, with altcoins suffering disproportionately steeper losses. Wiston Capital's Charlie Erith attributed the sell-off to a combination of geopolitical tensions and speculative overleveraging, noting that Bitcoin's resilience compared to altcoins underscored its role as a safe-haven asset amid market uncertainty Coindesk^[2].

Macro factors, including Federal Reserve policy and the so-called "debasement trade," have further influenced Bitcoin's trajectory. Fed Chair Jerome Powell's recent comments comparing Bitcoin to gold-emphasizing its speculative nature-coincided with a 3% rally in Bitcoin to $103,000 XTB^[7]. Meanwhile, investor concerns over U.S. dollar devaluation and rising government debt have driven capital into gold and cryptocurrencies, with Bitcoin hitting a record $126,200 earlier this week . The "debasement trade," as described by analysts, reflects a shift toward assets perceived as hedges against inflation and currency debasement, with central banks and institutional buyers contributing to sustained demand .

Despite the volatility, institutional demand for Bitcoin continues to outpace supply, according to BTCC research. Miners produce approximately 900 BTC daily, but corporate buyers, including MicroStrategy, have absorbed over 1,200 BTC/day. Whale activity, with 10,000+ BTC moving to cold storage during the crash, further signals confidence in Bitcoin's long-term bullish narrative BTCC^[3]. The firm's analysts argue that the recent pullback mirrors historical patterns seen in past bull cycles, with a 15% correction viewed as a necessary "shakeout" for a potential $150,000 rally in early 2026 BTCC^[3].

Market participants are now closely monitoring key indicators to gauge the next phase. These include Bitcoin's 365-day EMA, its dominance in the crypto market, and the VIX equity volatility index Coindesk^[2]. Erith of Wiston Capital emphasizes that a sustained break below $100,000 would raise concerns about a deeper correction, while a retest of $117,000 could signal renewed bullish momentum Coindesk^[2]. Additionally, the Fed's upcoming rate cut decisions and Powell's speech on October 10 are expected to influence liquidity flows and investor sentiment in the near term NBC News^[6].