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Alarming Signs Bitcoin Confidence Is Falling Fast

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Abhijeet SabhadindeBy

Key Points

  • Bitcoin enters the longest-ever hesitation phase
  • $19B wiped out in weekend liquidations
  • Long-term whales still profitable amid chaos
  • Market confidence stuck in “hesitation zone” for 49 days

Bitcoin is facing a rare and potentially dangerous moment: a complete breakdown in confidence. After over $19 billion in leveraged trades were wiped out over the weekend, Bitcoin’s pulse is no longer steady, and investors are beginning to panic.

At the heart of this breakdown is Bitcoin confidence, which has fallen to levels rarely seen before. Traders are no longer certain whether we’re heading into a full bear cycle or simply experiencing a temporary reset.

Ki Young Ju, CEO of CryptoQuant, pointed out that “paper Bitcoin” holders, those who’ve been holding BTC for less than 155 days, are now deeply underwater. These newer investors were driving much of the recent market activity, but are now suffering losses just as volatility returns.

“It doesn’t mean we crash or rally,” Ju posted on X. “But volatility is coming.”

In contrast, long-term whales, the deep-pocketed players who have held Bitcoin for years, are still in profit. This creates a stark divide between newer leveraged traders and experienced holders. And that divide is creating cracks in the market’s foundation.

The market is also showing signs of behavior last seen in early 2022, where derivative-driven trades overwhelmed spot markets. Analysts now believe that dynamic may be reversing, which could be healthy in the long run, but only after the pain of a full reset.

Interestingly, this reset is happening as new crypto narratives emerge, like the rise of perpetual DEXs which are gaining traction over centralized exchanges. Synthetix’s SNX token is one such example, leading the way in decentralized derivatives.

As this reset unfolds, Bitcoin confidence is being tested like never before.

Investor Hesitation Hits All-Time High

Perhaps the strongest signal that things have changed is the data coming from Murphy Chen’s Investor Confidence Index. For 49 straight days — since August 27, the index has been stuck in the dreaded “hesitation zone.”

That’s not normal.

“Usually, the market decides a direction within one week to a month,” Chen explained. “This is the longest hesitation we’ve ever recorded.”

This means traders are frozen. Not selling. Not buying. Just waiting.

And this indecision is the worst possible environment for leveraged traders and high-frequency bots who rely on strong trends.

Chen believes the core structure of the bull market is still in place. But he also warns that with such low Bitcoin confidence, the chances of misreading signals are high.

“It’s a time to reduce exposure, sit on cash, and watch,” he advised.

This caution is being echoed by many in the community. Some traders are going risk-off entirely, while others believe this phase could actually set the stage for the next bull run, after the leverage clears out.

Trader Garrett noted that the recent price rebound wasn’t healthy, it was driven by excessive long leverage. He believes the $19B liquidation was necessary to clean out weak hands and speculators.

On the other hand, analyst Phyrex believes the crash was a good thing. He called it “a necessary cleansing” that forced major exchanges to rethink risk management, and triggered a fresh round of deleveraging.

“Open interest in both BTC and ETH has dropped significantly,” he said. “That’s a strong signal that we’re flushing out excess risk.”

All of this points back to one key issue: the market is struggling with Bitcoin confidence. Until that returns, any price action could be a head fake.

Meanwhile, major crypto platforms like Coinbase are adapting to shifting volume dynamics, especially in regions like South Korea. The emergence of the “Kimchi Premium” again shows how localized sentiment can influence global crypto pricing.

Community Sentiment Remains Deeply Divided

As prices struggle to find footing, the mood in the broader crypto community remains tense and split. Popular trader James Crypto Guru recently announced he was closing out his BTC and altcoin positions, citing unclear market signals.

“Something is wrong. I think we’re going to retest supports,” he warned.

Others are even more skeptical. Crypto analyst AB Kuai Dong noted that Galaxy, a major OTC trading desk, revised its market outlook for the first time in two years following the October 11 crash. That’s an unusual move that signals major uncertainty, even among professionals.

In previous cycles, volatility like this was often followed by rebounds as speculators returned with fresh capital. But this time, Bitcoin confidence isn’t bouncing back quickly. The hesitation is lasting longer. The fear is deeper. And even the pros seem unsure.

While institutional adoption and regulation are evolving, the G7 recently pushed forward its stablecoin framework, a development that could bring long-term clarity but adds short-term uncertainty.

We’re also seeing increased political attention on crypto in regions like the UK, where XRP was debated in Parliament, showing that crypto’s legal and financial status remains in flux.

With the holiday season approaching, many in the market are wondering whether the upcoming Crypto Black Friday deals might attract new retail users back into the fold, or if this cycle of hesitation will linger into 2026.

But for now, one thing is certain: Bitcoin confidence is at its weakest point in years. And until traders find conviction, this market may continue to drift in uncertainty.

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Abhijeet Sabhadinde
Abhijeet is a crypto and Web3 writer focused on clarity and results. He covers DeFi, NFTs, and market shifts with content that grows search and authority.
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