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

BlockBeats News, October 11th, Cryptocurrency analyst @ali_charts posted a market analysis today, stating that we witnessed the largest-scale liquidation event in cryptocurrency history, which can only be described as a total flash crash. Approximately $19.3 billion in positions were liquidated in a single day, affecting around 1.66 million traders. Many assets experienced significant intraday drops, followed by some rebound, but the scale of this sell-off has raised serious questions about where the market stands in a broader cycle.

By delving into historical data, the most recent similar event was during the tail end of 2021, when Bitcoin was at its peak around $69,200. The flash crash in December 2021 wiped out over 24% of the market cap in a single daily candle, an event that was later proven to mark the beginning of a subsequent bear market. Today's Bitcoin daily candle shows a peak-to-trough drop of around 17%, which is strikingly similar to the late 2021 tail-end crash in scale and context. The similarities between the two in terms of the market being at a local peak, an overcrowded long position frenzy driven by excessive leverage, and a cascading liquidation event make it hard for traders to ignore. While one may view this rebound as a buying opportunity, caution is paramount. 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, and traders should ensure that stop-loss orders are activated and position sizes are under control.