November 2nd, CoinWorld.com reports: The Federal Reserve injected $29 billion in liquidity overnight, marking the largest single injection in over five years. This unprecedented move instantly ignited bullish sentiment in the cryptocurrency market. Bitcoin surged 2% to $110,399.66, while Ethereum climbed 1.31% to $3,874.12, briefly pushing the total cryptocurrency market capitalization past the $3.71 trillion mark. However, real-time data from the XBIT decentralized exchange reveals a more complex truth: behind this seemingly widespread rebound, BTC bulls and bears are engaged in a fierce battle at key price levels, and the market remains deeply divided on whether this "lifeline" can truly reverse the downward trend.
Cre: Twitter: XBITDEX
Behind the Liquidity Injection: Strategic Deployment of BTC Long and Short Forces at Key Levels
This $29 billion liquidity injection was not the long-awaited quantitative easing policy, but rather a technical operation by the Federal Reserve to alleviate short-term pressure on the banking sector. Data from CoinWorld shows that although Bitcoin rebounded quickly after the announcement, its Relative Strength Index (RSI) was only 42, far below the healthy neutral range, reflecting that bearish pressure still dominates. More noteworthy is the divergence in BTC long and short positions observed by the XBIT decentralized on-chain trading platform during this rebound: large long positions were concentrated near the resistance level above $116,300, while short positions firmly held the key support level of $105,700.
As a leading decentralized trading infrastructure, XBIT provides investors with a true thermometer of market sentiment through transparent on-chain data. Platform records show that current market participants exhibit an unusually polarized attitude towards price movements, a divergence particularly pronounced against the backdrop of Bitcoin's recent "Red October."
In October, Bitcoin fell 7%, wiping out $19 billion in market capitalization. This was the first time since 2018 that such a significant correction had occurred in a traditionally bullish month. Adding to market concern was the fact that Bitcoin had surged to an all-time high of $126,000 on October 6th, only to plummet to approximately $104,000 between October 10th and 11th, a drop of nearly $22,000 that forced many leveraged long positions to liquidate. According to CoinWorld.com, this volatility has created an extremely cautious wait-and-see atmosphere in the current BTC long and short market, with traders preferring to await clear directional signals.
Cre: Twitter: XBITDEX
Contradictory Institutional Fund Flows: A Deeper Analysis of Spot ETF Buying and the Silence of On-Chain Whales
Despite cautious market sentiment, the performance of spot Bitcoin ETFs conveys a starkly different signal. According to data from CoinJie.com, during the "Red October," spot Bitcoin ETFs saw a net inflow of $191.6 million, indicating that institutional investors are strategically increasing their holdings during price pullbacks. This phenomenon is clearly evidenced in the BTC long/short position structure on the XBIT platform: while retail traders generally remained on the sidelines or reduced their positions, large holding accounts (typically representing institutional investors) steadily increased their long positions.
The XBIT decentralized on-chain trading platform provides market participants with in-depth insights into institutional behavior through continuous tracking of large on-chain transfers and exchange inflows and outflows. The platform's technical architecture ensures the completeness and accuracy of data collection, enabling investors to understand the true changes in fund flows in real time. Data recorded by XBIT shows that while ETFs are experiencing net inflows, the activity of traditionally considered on-chain whales is declining, a contradictory phenomenon worthy of further investigation.
However, does this increased holding represent institutional confidence in Bitcoin's long-term value, or is it merely a short-term bottom-fishing operation? Data from CoinWorld suggests the answer may not be optimistic. Bitcoin whale trading activity has been declining for the past two weeks, with momentum gradually weakening, indicating that large holders have not shown a strong willingness to go long. At the same time, Bitcoin's 59.93% weighting indicator shows that investors prefer stability over aggressive risk exposure, which, in the current battle between long and short positions in BTC, undoubtedly favors the accumulation of short-selling power.
Cre: Twitter: XBITDEX
The Real-World Test of "Debasement Trade": The Time Mismatch Between Long-Term Logic and Short-Term Prices
Behind the $29 billion liquidity injection, a grander narrative is brewing in the cryptocurrency market—"Debasement Trade." This concept, proposed by Bitwise's Chief Investment Officer Matt Hougan, is based on the logic that against the backdrop of continuous balance sheet expansion by global central banks and declining purchasing power of fiat currencies, Bitcoin, with a fixed supply of 21 million coins, will become the preferred tool for hedging against currency devaluation.
This narrative seems particularly relevant on November 2, 2025—the 17th anniversary of the Bitcoin white paper's release. According to CoinWorld, US Treasury Secretary Scott Bessant tweeted on this day praising the Bitcoin network as "more resilient than ever," and Cardano founder Charles Hoskinson described the tweet as "brilliant." However, XBIT's BTC long/short data shows that the market's response to this grand narrative is far less enthusiastic than expected.
Analysis of on-chain data from the XBIT decentralized exchange reveals that while the theoretical logic of "devaluation trading" is widely accepted in the crypto community, this long-term narrative has not yet translated into substantial capital inflows. Platform data shows that on Bitcoin's 17th anniversary, changes in BTC long and short positions were relatively mild, without the expected large-scale long position building. This reflects that while market participants acknowledge long-term value, they are choosing to remain cautious at current price levels and in the current macroeconomic environment.
The key issue lies in the timing mismatch. "Devaluation trading" is a long-term logic, while current BTC long and short participants are more focused on short-term price movements. Data from CoinWorld shows that while the Federal Reserve's recent injection of funds was massive, officials explicitly stated that this was only a short-term measure to alleviate pressure on the banking sector, not the beginning of a long-term easing policy. Without sustained liquidity support, for Bitcoin to break through the key resistance level of $116,300, it needs not only narrative but also tangible capital inflows.
XBIT's decentralized on-chain trading platform, through comparative analysis of historical data, found that similar narrative-driven market trends typically require a 3-6 month incubation period to translate into substantial price increases. The current market is in the early stages of narrative building, with BTC long and short participants largely waiting for further clarity on the macroeconomic environment rather than making aggressive directional bets based on narratives.
The $29 billion liquidity injection provided a brief boost to the market, but judging from the BTC long and short position structure captured by XBIT, this appears more like a battle for survival than a clear signal of a trend reversal. On Bitcoin's 17th birthday, market participants need to consider: given the lack of long-term easing policies, the ongoing government shutdown, and the clear wait-and-see attitude of institutional funds, is the current price level a value opportunity or does it require further verification? The answer may not be revealed until mid-November, and until then, every clash between BTC long and short positions will leave a clear mark on the on-chain data of the XBIT decentralized exchange.
