The September 2017 collapse revealed the true nature of the cryptocurrency market

By the end of September 2017, the cryptocurrency market experienced an unexpected turn after months of speculation. What started as a drastic correction of Bitcoin turned into an event that, in just three months, multiplied the value of certain digital assets up to seven times, while altcoins suffered losses exceeding 80%. This period marked a crucial inflection point for understanding how cycles truly operate in decentralized markets.

During the quarter following September, the cryptocurrency market experienced extraordinary growth. Total market capitalization rose from approximately $150 billion to over $800 billion in just four months. This exponential expansion reflects a fundamental characteristic of these emerging assets: their growth potential significantly surpasses that of mature markets like gold (22 trillion) or the US stock market (37 trillion). However, this contrast also reveals why they attract both speculators and cautious investors.

The Illusion of Market Opinions After September

Invariably, every fall of Bitcoin and Ethereum generates catastrophic predictions. During the September crash, critics insisted that these coins would not recover their value. However, when the market finally rebounds, those same voices change their narrative. The same pattern occurred years later: when Ethereum seemed doomed, investors were warned to abandon the cryptocurrency for Bitcoin, but then Ethereum reached new heights that Bitcoin could not match.

This cycle revealed an uncomfortable truth: most market participants simply chase the trend rather than understand the underlying structures. When the price structure breaks—meaning, when key technical levels are breached—even the most seasoned bulls turn into bears. Structural breaks are not minor corrections; they are events that can completely reconfigure market behavior.

On-Chain Liquidations: The Hidden Mechanism of Corrections

The event on October 10 proved to be a vivid example of how coordinated liquidations work in cryptocurrency markets. A 99% drop completed in just 45 minutes, followed by a swift recovery, is not market coincidence. It is a mechanism designed to clear positions and force the exit of unwary traders.

Before a bull run for altcoins, leveraged long positions surge massively. After the rally begins, short positions are exploited. This pattern does not only affect altcoins; Bitcoin and Ethereum follow identical dynamics. The reason is simple: creating a break in the price structure allows more participants to fall behind in the market. Those who understand these mechanisms stay ahead; others are eliminated in each turbulence.

Market Capitalization and Long-Term Predictions

Three months before September, experienced observers predicted that the market capitalization of the cryptocurrency cycle would reach at least $7.5 trillion. During the three or four months following September, growth was meteoric—precisely designed to liquidate both bulls and bears. More experienced traders emphasized that leverage should not be used, nor should short-term trades be executed during this extreme volatility.

Paper Hands vs. Resolution: The True Test of the Market

At this point in the cycle, investors entering the market are typically “paper hands”—traders with little experience or limited capital. They are not “diamond hands,” those investors who hold through the greatest turbulence. When the market trembles and the inevitable correction occurs, paper hands are systematically eliminated.

The October correction was not simply a “market cleanup” in the traditional sense. It was a cataclysmic event in scope but surgical in precision, designed to redistribute capital from the weak to the strong. The rapid subsequent rise demonstrated that the underlying fundamentals remained intact.

The Cycle Is the Only Truth in This Market

Years after September 2017, one conclusion remains unchanged: everything in this circle is temporary, except for two things that are absolutely real—cycles and human nature. Cycles determine when the market will rise and fall; human nature determines who will win and who will lose. Those who understand this duality thrive. Those who ignore this reality fall behind, wondering what happened when the next cycle begins.