The cryptocurrency market has faced a significant downturn recently, following a period of strong performance earlier in October. On Thursday, Bitcoin, the flagship cryptocurrency, plunged to below $87,000, marking a roughly 14% decline in just one week. This downturn has also affected altcoins such as Ethereum and Solana, which are down approximately 13% and 9%, respectively, with Ethereum currently priced around $3,000 and Solana at $139. Publicly traded companies focused on crypto, like Strategy and Circle, have similarly struggled, experiencing declines of about 16% and 20% over the past week.
This sell-off occurs in the context of a market that had previously high hopes for 2025, largely due to a perceived supportive regulatory environment under President Donald Trump. Bitcoin had even managed to outperform the S&P 500 for much of the year. However, since October 6, Bitcoin has seen a dramatic 31% drop from its all-time high near $126,000, contrasting sharply with a mere 3% increase in the S&P 500. Factors contributing to this slump include the recent flash crash in October, increased caution from the Federal Reserve, and a general aversion among investors towards risky assets.
James Butterfill, head of research at CoinShares, commented on the precarious state of the markets: “Markets are essentially flying blind right now, starved of meaningful macro data and stabbing in the dark. That vacuum has triggered broad risk-asset selling.” He noted that a sudden shift in expectations regarding a potential rate cut by the Fed has exacerbated the selloff.
The crypto market’s plunge began on October 10, coinciding with what analysts from CoinGlass described as the largest liquidation event in history. This event followed Trump’s new tariff threats against China, adding to the uncertainty in macroeconomic conditions and diminishing hopes for an imminent rate cut by the Fed.
Despite this turmoil, Vetle Lunde, head of research at K33, remains optimistic about the future of cryptocurrencies. In a report released on Tuesday, he highlighted the accelerating institutional adoption of crypto this year and expressed confidence that better times are ahead. Lunde predicts that Bitcoin may bottom out between $84,000 and $86,000 before beginning a recovery, noting that previous downturns have typically lasted over 50 days, while the current one is only on day 43.
The situation underscores the volatility of the crypto market but also points to the resilience and potential for recovery as institutional interest grows. As the market seeks to navigate these turbulent waters, there is hope that the fundamentals driving the crypto space will ultimately prevail.