The global financial landscape entered a period of pronounced fragility this week as a confluence of macroeconomic shocks, technical breakdowns, and institutional retrenchment converged to pressure risk assets across the board.
Nowhere was this more evident than in the cryptocurrency market, which shed 2.39 per cent over the past 24 hours and extended its weekly decline to 10.83 per cent. The sell-off did not occur in a vacuum. Instead, it unfolded against a backdrop of escalating geopolitical friction, banking sector stress, and shifting central bank narratives that collectively amplified risk-off sentiment and triggered a cascade of forced liquidations.
The immediate catalyst for the latest leg down came from former US President Donald Trump, who on October 10 announced a sweeping proposal to impose 100 per cent tariffs on all Chinese imports, effective November 1, alongside new export controls on critical software technologies.
The announcement rattled global markets. Within hours, Bitcoin tumbled 3.5 per cent to US$107,500, while altcoins suffered even steeper losses ranging from 15 per cent to 60 per cent. The move reignited fears of a full-blown trade war between the world’s two largest economies, prompting investors to flee speculative assets in favour of traditional safe havens.
Gold responded accordingly, climbing to a record US$4,361 per ounce, a 2.1 per cent gain, while the US Dollar Index softened by 0.46 per cent to 98.34. The Russell 2000 Index, a barometer of domestic risk appetite, fell 1.2 per cent, underscoring the breadth of the risk aversion.
What made this episode particularly significant for crypto was the reestablishment of a near-perfect correlation with traditional equities. Over the past 24 hours, Bitcoin’s price movement tracked the S&P 500 with a correlation coefficient of 0.948, the highest since 2023. This tight linkage signalled a return to the risk-on, risk-off regime that dominated markets during the post-pandemic monetary tightening cycle.
In such an environment, crypto loses its identity as an uncorrelated asset and instead trades as a high-beta extension of the tech sector. With US equities already under pressure, Dow Jones down 0.65 per cent, S&P 500 down 0.63 per cent, Nasdaq down 0.47 per cent, the path of least resistance for Bitcoin became unmistakably lower.
Compounding the macro headwinds was a decisive technical breakdown in Bitcoin’s price structure. After consolidating for weeks within the US$115,000 to US$123,000 range, the flagship cryptocurrency finally breached the lower bound of that zone, closing decisively below US$115,000. This move invalidated a key support level that had held through multiple tests and opened the door to deeper downside. Technical analysts noted the emergence of a potential double-top pattern, with bearish confirmation hinging on a weekly close below US$110,000.
Adding to the negative momentum, both the 20-day and 50-day moving averages turned downward, while the Relative Strength Index (RSI) plunged to 31.67, deep into oversold territory but not yet signalling a reversal. Futures market data revealed that open interest had actually risen by 2.3 per cent in the days leading up to the crash, suggesting that short sellers had positioned aggressively ahead of the breakdown, anticipating exactly this kind of macro-driven selloff.
Perhaps the most destabilising element of this week’s decline was the scale and speed of the leverage unwind. On October 16 alone, over US$724 million in crypto positions were liquidated across major exchanges, with long positions accounting for a staggering 74 per cent of that total.
This lopsided distribution pointed to excessive bullish positioning among retail traders, who had been riding the coattails of recent institutional inflows. The average funding rate across perpetual futures markets stood at +0.0052 per cent, reflecting persistent long-side pressure that left the market vulnerable to a sharp reversal.
When the macro shock hit, the resulting price drop triggered a domino effect. Margin calls forced leveraged longs to sell, which pushed prices lower, which triggered more liquidations. This feedback loop accelerated the decline and created a vacuum of buyers precisely when support was most needed.
Institutional participation, which had provided a crucial floor for prices in prior months, also pulled back sharply. Bitcoin ETF inflows, which surged to US$2.7 billion the previous week, collapsed to just US$571 million this week, a drop of US$2.129 billion. Grayscale’s GBTC alone saw US$22.5 million in outflows on October 16, marking a notable shift in sentiment among large players.
This cooling of institutional demand removed a key source of structural buying just as retail leverage was imploding. The result was a market caught between two stools: no longer buoyed by ETF-driven accumulation, and simultaneously crushed by retail deleveraging.
Meanwhile, central bank commentary added another layer of uncertainty. Federal Reserve Governor Stephen Miran, a voting member of the FOMC, signalled his intent to advocate for a half-percentage-point rate cut at the upcoming meeting, a dovish stance that initially supported risk assets but now appears at odds with persistent inflation concerns.
Conversely, Bank of Japan Governor Kazuo Ueda kept the door open for further rate hikes, stating that the BOJ would continue tightening if confidence in its economic outlook strengthens. These divergent policy paths contributed to volatility in global bond markets, with the 10-year US Treasury yield falling 7 basis points to 3.97 per cent and the two-year yield dropping 8 basis points to 3.42 per cent. While lower yields typically support risk assets, the move this week reflected safe-haven demand rather than genuine monetary easing expectations, offering little comfort to crypto traders.
Even geopolitical developments weighed on sentiment. President Trump’s announcement that he and Russian President Vladimir Putin would meet in Hungary to discuss ending the war in Ukraine introduced new uncertainty into energy markets. Brent crude fell 1.37 per cent to US$61.06 per barrel on fears that a negotiated settlement could ease sanctions and flood the market with Russian oil. While lower energy prices might normally support risk assets by curbing inflation, the opaque nature of the proposed talks raised concerns about broader geopolitical realignments that could destabilise existing alliances and trade flows.
Looking ahead, the critical level to watch remains US$110,000 for Bitcoin. A weekly close below this threshold would likely invite a wave of algorithmic selling and accelerate the move toward US$100,000. A strong bounce could signal that the worst of the deleveraging is over. Traders should closely monitor two key indicators in the coming days: US Treasury yields and Bitcoin ETF flows.
A reversal in ETF inflows, particularly if they return to the US$2 billion-plus levels seen recently, could provide the buying pressure needed to stabilise prices. Similarly, a stabilisation or decline in the 10-year yield would ease financial conditions and potentially reignite risk appetite.
Despite the current turbulence, Bitcoin’s underlying fundamentals remain robust. Network hash rate continues to hover near all-time highs, reflecting strong miner commitment and infrastructure investment. On-chain activity, while subdued during the selloff, has not shown signs of capitulation among long-term holders. This suggests that the current weakness is driven more by short-term leverage and macro sentiment than by a fundamental erosion of value.
In conclusion, the crypto market now navigates a perfect storm of external pressures and internal fragilities. The triple threat of trade war escalation, technical breakdown, and institutional pullback has exposed the limits of crypto’s decoupling narrative. Until macro conditions stabilise and leverage levels normalise, volatility will remain elevated, and the path to recovery will depend less on crypto-specific developments and more on the broader trajectory of global risk sentiment.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
