Analysis: Today's flash crash is similar to the 2021 bull tailspin. Traders should activate stop-loss orders and control position size.

On October 11th, the cryptocurrency analyst @ali_charts shared a market analysis today. He pointed out that we have witnessed the largest-scale liquidation event in the history of cryptocurrencies. This can only be described as a complete flash crash. Approximately $19.3 billion worth of positions were liquidated in a single day, affecting around 1.66 million traders. Many assets witnessed significant intraday declines and then some rebounds. However, the scale of this sell-off has raised serious questions about the position of the market in a broader cycle. By looking into historical data, the most recent similar event occurred at the end of 2021 when Bitcoin was at its peak around $69,200. The flash crash in December 2021 wiped out more than 24% of the market capitalization in a single daily candle. This event was later proved to mark the beginning of the subsequent bear market. Today's Bitcoin daily candle shows a peak-to-trough drop of around 17%, which is strikingly similar in scale and context to the end-of-2021 crash. The similarities between the two, such as the market being at a local peak, an overcrowded long position frenzy driven by excessive leverage, and a cascading liquidation event, make it difficult for traders to ignore. While some may view this rebound as a buying opportunity, caution is of the utmost importance. Such large-scale liquidations often signal a shift in market structure rather than a temporary dip. This event may represent a market top, followed by a potentially deeper retracement. If one currently holds long positions, strict risk management is essential. Traders should ensure that stop-loss orders are activated and position sizes are under control.