Bitcoin‘s sharp declines have often coincided with forced selling, marking potential turning points during major market downturns, according to crypto market analyst Sarosh. In a recent post shared on X, Sarosh reviewed four notable episodes where forced sellers exited the market before broader optimism returned, drawing parallels between past cycles and current market moves.
Forced selling and Bitcoin’s recent decline
Sarosh observed that periods of extreme selling pressure, sometimes called “max pain,” have historically ended with a sharp market rebound while overall sentiment remained negative. He compared Bitcoin’s latest correction—about 53% from its October 2025 all-time high—to previous dramatic declines, noting that forced liquidations have played a major role in those reversals.
He stated that forced sellers are those who can no longer wait for prices to recover, often driven by margin calls, leveraged positions, or financial distress. As these participants exit, fewer buyers are required to stabilize the price, potentially setting the stage for a recovery before confidence has built back up across the market.
Even when fear is at its peak, a recovery may begin once those who must sell are out of the market—sellers who run out of options can create the conditions for a price bottom before sentiment turns positive.
Bitcoin trades continuously, so cascading sell-offs can unfold rapidly, especially among leveraged futures traders. When prices fall and traders’ margin balances are wiped out, exchanges may automatically close their positions, triggering waves of liquidations known as “liquidation cascades.” This phenomenon helped fuel Bitcoin’s rapid drop during crisis events.
Mini dictionary: Liquidation cascade, a sequence of forced sales in which leveraged positions are closed automatically by exchanges as prices fall, leading to further downward pressure and additional liquidations.
Major “max pain” events in Bitcoin history
Four notable events illustrate this forced selling effect: the Mt. Gox collapse in 2014, the 2018 bear market, the March 2020 pandemic crash, and the FTX exchange failure in 2022. For instance, after Mt. Gox, Bitcoin declined from around $1,150 to the $150–$200 range—a loss of about 85%—before a sustained recovery began.
The 2018 crash saw prices fall roughly 84% from the peak as a wave of selling overwhelmed the market, briefly driving miners to shut down unprofitable hardware. In March 2020, a liquidity crunch forced Bitcoin down from $8,000 to under $4,000 within days, only to rebound once liquidations subsided. Similarly, after FTX’s collapse, Bitcoin plunged to about $15,500, down 78% from its 2021 high, but soared past $126,000 by October 2025.
| Event | Fall from Peak | Recovery Indicator |
|---|---|---|
| Mt. Gox (2014) | 85% | Price stabilized before sentiment improved |
| 2018 Bear Market | 84% | Miners capitulated, market slowly recovered |
| March 2020 Crash | ~50% | Fast rebound after liquidations |
| FTX Collapse (2022) | 78% | Rapid recovery following forced selling |
| 2025 Correction | 53% | Analyst monitoring for similar pattern |
Monitoring current sentiment
Sarosh pointed out that Bitcoin’s recent drawdown is less severe than past cycles, but cautioned that market bottoms do not rely solely on the size of the fall. He also noted the influence of new instruments like spot Bitcoin ETFs, which have made it simpler for investors to buy and sell Bitcoin quickly, enhancing liquidity—but also potentially intensifying future sell-offs.
He emphasized that the actions of buyers following renewed selling pressure will provide clues for whether a market turn is imminent. Extended buying after a downturn, or resilience during fresh negative news, can signal that forced selling has subsided.
A turning point often becomes apparent when inflation is high, geopolitical tensions persist, yields remain elevated and central banks maintain a hawkish stance—yet the price no longer makes new lows despite bad news.
Sarosh advised monitoring price reactions when sellers re-enter, as a resilient price floor and the persistence of strong buyers could suggest the end of maximum pain and the possibility of a new upward trend.
