Bitcoin in 'sustained recovery' from October liquidity scares

Bitcoin in 'sustained recovery' from October liquidity scares

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Wed, January 7, 2026 at 10:23 AM EST

In this video:

Bitcoin (BTC-USD) is holding above $91,000 after a tumultuous end to 2025, where the crypto asset saw a sell-off from its record high reached in October.

Coinbase Head of Institutional Strategy John D'Agostino sits down with Yahoo Finance executive editor Brian Sozzi to explain the liquidity scares that dragged bitcoin down in recent months, characterizing bitcoin's recent price patterns as being in a "sustained recovery."

To watch more expert insights and analysis on the latest market action, check out more Opening Bid.

Video Transcript

00:00

Speaker A

Bitcoin prices have rebounded to start the year after trading in a tight range following sell-offs in the fourth quarter of last year. Forced liquidations and selling by long-term holders pushed prices down as much as 35% from their October highs. You know who hasn't forgotten about Bitcoin, my next guest, John D'Agostino, Coinbase Head of Institutional Strategy is here. John, good to see you again. Good to see you live in person. Appreciate it.

00:23

John D'Agostino

Always, always love to come see you.

00:25

Speaker A

So, at at its very simplest level, what is happening in Bitcoin? Help us understand this this mini rally.

00:35

John D'Agostino

Sure. Um, so, I can understand why people think it's it's happening suddenly, kind of post post New Year. The reality is, um, Bitcoin has been quietly recovering since a liquidity crisis around early October.

00:53

John D'Agostino

Um, now liquidity crisis in uh cryptocurrency is a bit different from other markets because unlike equities for example, the market makers, the participants who um usually buy and sell and bridge liquidity, they're not obligated to post bids and offers um like they are in the equity markets. So commodity markets and and crypto markets are similar in that way.

01:17

John D'Agostino

So on October 10th, we have what we call a liquidity crisis, which means people got scared. They got scared they were overextended on their balance sheets and they pulled liquidity away. They just exited the market.

01:29

John D'Agostino

And when that happens, you tend to get these violent gaps down in price because people are very, very scared about not being able to get out of their positions and they'll sell at any price. Um that happened. It happens in we we you've heard of flash crashes in equity markets, right? That's the equivalent.

01:38

Speaker A

I've tried to forget those, but yes.

01:39

John D'Agostino

Right. We it happens in all markets. When it happens in markets like crypto and commodities where the market makers are not obligated to be in the market, they tend to be a little more severe. So that happened on October 10th and it was scary.

01:52

John D'Agostino

Here's the good news. The good news is you didn't have this rapid violent unwinding. There were these support levels of institutional buyers. So retail panicked a bit, um they needed to get out, but institutional buyers kept that that that ground, that foundation.

02:12

John D'Agostino

Now, the uh it was reported that there was this horrible liquidity environment and so crypto kind of fell out of the news cycle for those two quarters and you saw this sort of grinding down sideways movement, boring price action.

02:32

John D'Agostino

What was happening for those of us who kind of stayed active in the market was we were a bit confused because you had this horrific retail sentiment. You had this um, you know, crypto Twitter and just Twitter X overall just being very bearish on the asset class. But what we were seeing at Coinbase...

02:51

Speaker A

Peter Schiff knows tweeting at Michael. It's all over, it's dead, it's going to zero, everything.

02:57

John D'Agostino

And and and um and that's fine. I I actually like those environments because you get to buy cheap things uh that people forget about. Uh but what was happening at Coinbase is we were noticing, well, institutions were just gaining interest. So that period from October to December was probably one of the most active institutional buying periods, and there wasn't a single institution that was looking at Bitcoin and crypto prior to October 10th that suddenly stopped because of October 10th.

03:31

John D'Agostino

So, there was this huge bifurcation of interest. It had massive institutional interest and horrible retail sentiment. And so what's happening is since October 10th to now is you're seeing a bit of a catchup of retail sentiment recognizing that institutions are still building and still growing. Um so I think of it less as a as a short-term spike and more as a sustained recovery.

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