The Bitcoin decline in October 2025: it's not just a "discount," it's a market restructuring

October 2025 was supposed to be “Uptober,” the traditionally favorable month for cryptocurrencies. Instead, it became a synonym for one of the most severe contractions in the crypto sector in the last decade.

Between October 5 and 7, Bitcoin hit new all-time highs between $124,000 and $126,000. Less than a week later, it plummeted below $105,000. The value erased? Over $1 trillion in global market capitalization in just a few weeks.

What happened during the black weekend of October

October 10-12 was the critical moment. In less than 24 hours:

• Bitcoin collapsed by about 16-18%
• Ethereum lost 11-12%
• Smaller altcoins experienced drops between 40-70%, with some flash crashes nearly to zero on less liquid pairs

This was not a simple market correction. It was a massive deleveraging event: $17-19 billion in leveraged positions liquidated, 1.6 million traders affected simultaneously worldwide.

The real reasons behind the collapse

The surprise announcement of tariffs up to 100% on Chinese imports by the Trump administration was the spark, not the fire.

The powder keg was already built:

The problem of excessive leverage: For months, the crypto market was dominated by traders using very aggressive leverage. Many believed in a linear path to Bitcoin at $150,000. When reality contradicted this narrative, automatic liquidations amplified the movement far beyond what macro news alone would have caused.

The macro imbalance: The Fed had promised rate cuts but maintained a cautious message: “Don’t expect easy money without conditions.” The market priced in this contradiction with structural tension.

The psychological factor: After months of optimistic discussions, the disconnect between the “narrative” (Bitcoin over $150,000) and “real prices” turned doubt into panic, especially among late entrants in full euphoria.

Where we are now and what to expect

Currently (January 2026), Bitcoin hovers around $91,870, about 27% below the October peak. Sentiment remains cautious despite Fed rate cuts.

Three possible scenarios for the rest of the year:

Scenario 1 – Gradual absorption: The market absorbs the shock, long-term holders accumulate, rebalancing strategies increase exposure to Bitcoin and large caps.

Scenario 2 – Nervous sideways trading: The market stops collapsing but struggles to rebound. Intraday volatility without real direction. A painful phase for short-term traders.

Scenario 3 – New downward leg: Bitcoin could test the $70,000-$80,000 area more decisively. Altcoins would suffer even more, with few positive catalysts in the short term.

Historical seasonal data for year-end

Analyzing Bitcoin from 2017 to 2024, the end of the year tends to be generally bullish, albeit with significant volatility. However, individual years show contrasting results: some final quarters experienced strong rallies, others significant declines. No guarantees.

How institutional investors react

Unlike 2021-2022, institutional capital in crypto is not purely speculative. Many funds consider it part of broader macro diversification strategies.

Despite the October drawdown, indicators suggest rebalancing and hedging rather than a definitive exit from the asset class.

However, the collapse has drawn regulators’ attention: proposals under discussion include greater transparency on leverage, stricter risk management requirements for exchanges, and uniform reporting standards.

Final lesson: volatility is not a deviation, it’s structure

The October 2025 collapse demonstrated the fragility of a market still dominated by aggressive leverage. But it also showed that the system remains liquid even under extreme pressure, and that institutional players are turning the “all or nothing” approach into a more mature rebalancing process.

For crypto investors, the message is clear: volatility is not a deviation from the crypto cycle, it is the crypto cycle itself. Those who choose to stay must do so with rigorous risk management, a clear time horizon, and awareness that moments like October 2025 will remain part of this asset’s history for a long time.