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Bitcoin has declined 7% year-to-date, putting the cryptocurrency on track for only its fourth annual loss since 2014. The digital asset has closed in negative territory just three times previously — in 2014, 2018 and 2022 — all during confirmed bear markets, raising questions about current market dynamics.

What Happened: Market Crash Triggers Systemic Concerns

Market observers point to Oct. 10 as a pivotal moment when Bitcoin crashed 10%, shedding more than $12,000 within roughly 24 hours in what became the industry's largest leverage liquidation event of the year.

Analyst Max Crypto questioned the underlying causes of the October crash, noting that exchanges and market makers publicly maintained operations were normal while price action suggested sustained selling pressure from large entities.

"This has really started to feel like a Luna event, when everyone said that we are fine, and it ended horribly," he wrote on social media platform X on Dec. 23.

Investor George Bodine characterized the Oct. 10 crash as the "pivotal moment to where we sit today," adding that the effects of what he termed "Crashtober" continue to affect market sentiment. The crash occurred as gold and silver reached record highs. "I have never seen the fundamentals behind Bitcoin as strong as this year," Bodine said.

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Why It Matters: Psychological Damage Persists

Crypto analyst Scott Melker said the October crash "exposed problems that still haven't been fixed, which is why the market feels so bad even now." He cited compromised liquidity and increased caution among market makers as ongoing issues.

Altcoins have failed to show genuine recovery, declining when Bitcoin weakens without attracting new capital, Melker noted.

This pattern indicates capital is leaving the market entirely rather than rotating between assets. "October 10 broke something psychologically," he said. "Until liquidity, participation, and conviction come back together, rallies will feel fragile, and selloffs will feel fast."

Analyst CrediBULL Crypto offered a contrasting view, describing the event as "a massive deleveraging event" rather than structural damage.

Aggregate open interest has declined since October, indicating reduced confidence in perpetual futures positioning. "Less leverage in the system is not a bad thing, as it simply means this next rally is even more sustainable than the prior one," the analyst said.

Bitcoin traded at $86,844 at press time, down on the day.

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