October is off to a sharp start for the cryptocurrency market. Initially seen as the beginning of Uptober, a traditionally bullish month, it soon became known as Rektober, as many now call it. The abrupt market collapse on the first day of the month destroyed $10 billion in market value, with over $500 million in liquidations, as the heatmap of cryptocurrency liquidations shows.

Large assets like Ethereum and Bitcoin suffered the most, with liquidations of ETH coming in at $109 million and BTC totaling over $140 million. The Bitcoin chart indicates a sharp rejection from resistance at $64,000, which caused the price to drop quickly to just over $61,000.

Although there was a period of bullish expectation prior to this decline, Bitcoin is now back at a crucial point. While traders were anticipating a continuation of the bullish trends from prior years, it appears that the market misjudged the start of October, a month that has historically resulted in gains.

All the charts seem to indicate otherwise. A breakdown above $60,000 could send the asset plunging even lower, perhaps into the high $50,000s. As of right now, Bitcoin is testing its support levels. There may be overly leveraged positions being taken out based on the high number of liquidations.

Assuming the market would maintain its bullish momentum, many traders opened long positions. Nevertheless, these positions have been activated by the quick reversal, which is exerting additional downward pressure. The liquidation data indicates that long positions accounted for the great majority of liquidations, indicating widespread expectations of an Uptober rally.

Now the question for Bitcoin is whether it can continue to rise above its important support levels. While the market needs to recover from the liquidation shock and find stability before any more gains can be anticipated, a recovery could revive hopes for a late rally this month. To ensure that Bitcoin does not fall into a more severe retracement, it is imperative that it stays above the $60,000 mark.