Bitcoin's $19 billion wake-up call: One-year later, has crypto learned anything?

"People were keenly aware, like me, they were bulled up because it was 'go' time," Connors said. "We were going to go to that $250,000 to $300,000, $400,000 level using previous cycles."

Instead, the market turned against them.

"The movement was obviously not onchain data. I mean, it was all derivatives," he said. "So paper bitcoin again is alive and well and governs the near term." The lesson, he argues, is that bitcoin's price can be driven as much by leveraged bets as by demand for the asset itself.

That hasn't changed much in the past year. Perpetual futures, which allow traders to bet on price moves without owning bitcoin, remain a major part of crypto trading. Exchanges also have strong financial incentives to keep offering leveraged products. Still, traders may be better equipped to navigate the risks.

"The data is getting better at defining what the market structure is," Connors argued, pointing to improved visibility into order books and positioning. "More information means greater certainty, less volatility."

Chris Sullivan, co-founder of Hyperion Decimus, said traders can take steps to protect themselves from the kind of losses seen last October.

His advice starts with avoiding leverage and keeping a close eye on open interest, funding rates and market sentiment. Open interest tracks the number of outstanding derivatives contracts, while funding rates reflect the cost of holding positions in perpetual futures. Together, they can help traders spot when the market is leaning too far in one direction.