The Bitcoin crash between October and November 2025: when politics meets excessive leverage

What was supposed to be “Uptober” – the traditionally favorable month for the crypto sector – turned into a synonym for one of the most severe crashes of the last decade. Between October 5 and 7, Bitcoin hit all-time highs in the $124,000-$126,000 range before beginning a steep decline that by the end of November erased over one trillion dollars from the total market capitalization. Today, in January 2026, the price hovers around $91,450, marking a decline of approximately 25-27% from the autumn peak.

The Trigger Event: When Geopolitics Meets the Crypto Market

The weekend of October 10 to 12 marks the peak of tension. In a few hours, Bitcoin plunged below $105,000 while Ethereum suffered losses of 11-12%. Many altcoins experienced drops between 40% and 70%, with some less liquid assets reaching critical levels. What struck analysts was not just a simple correction, but a brutal deleveraging event that exposed the structural fragilities of the ecosystem.

The trigger was unequivocally political: the announcement of tariffs up to 100% on Chinese imports by the Trump administration sparked a risk aversion wave in global markets. Cryptocurrencies, by their nature sensitive to sentiment, were on the front line. Those holding highly leveraged positions had no time to react: in less than 24 hours, about $17-19 billion in margin positions were liquidated, involving up to 1.6 million traders simultaneously.

The Powder Keg Was Already Loaded: Leverage, Narrative, and Diverging Reality

Reducing what happened solely to the tariff announcement would mean misunderstanding the underlying complexity. The news was the spark, not the explosion. For months, the market had been navigating a precarious balance between two opposing forces: on one side, the narrative of a super-cycle supported by Fed rate cuts; on the other, conflicting macro signals suggesting caution.

The massive use of leverage had made the system extremely unstable. When prices started to fall, forced liquidation of positions amplified the movement far beyond what was justified by the geopolitical news alone. There is also a psychological component: after months of discussions about Bitcoin surpassing $150,000, a significant portion of traders believed the trend was almost inevitable. When reality contradicted this narrative, the disconnect between expectations and actual prices turned doubt into panic, especially among new entrants.

Three Possible Scenarios for the End of 2025

Analyzing prospects through three distinct scenarios:

First scenario – Gradual absorption of the shock. The market continues to process October’s damage through rebalancing and accumulation by long-term holders. Some strategies are already favoring Bitcoin and large caps over more speculative altcoins.

Second scenario – Nervous sideways trading. The market stops crashing but fails to rebound convincingly. This phase is characterized by abundant false signals and intraday volatility that does not translate into clear quarterly directionality. Short-term traders are particularly affected.

Third scenario – A new downward leg. The most feared scenario would see Bitcoin strongly testing the $70,000-$80,000 area, while the altcoin sector shows depressed volumes and few positive catalysts.

Statistically, the last eight years show that the final quarter tends to be generally favorable, albeit with significant year-to-year oscillations. However, this historical regularity is often overturned by unforeseen macro and geopolitical shocks.

How Are Institutional Investors Responding?

A different element compared to previous cycles is the structuring of institutional capital. Many funds that in 2021-2022 traded cryptocurrencies solely from a speculative perspective are integrating them into broader macro diversification strategies. The October drawdown seems to have triggered rebalancing rather than definitive exits from the asset class.

The incident, however, has caught regulators’ attention. Authorities already working on frameworks for spot ETFs and stablecoins see what happened as confirmation that regulation is no longer a question of “if” but of “how.” Some proposals include greater transparency on leverage, more rigorous risk management requirements for exchanges, and uniform reporting standards for institutional operators exposed to cryptocurrencies.

What to Expect Moving Toward 2026

The October 2025 crash is not merely another chapter in crypto volatility. In terms of entities, causes, and consequences, it represents a crucial test of the sector’s maturity. It demonstrated how a political shock can propagate within minutes through a highly interconnected global ecosystem, amplified by aggressive leverage dynamics.

At the same time, it confirmed that the market remains operational even under extreme pressure and that the presence of institutional players tends to transform the past “all or nothing” approach into more gradual rebalancing. Volatility remains intrinsic to cryptocurrencies. Those choosing to maintain exposure must do so with a clear time horizon, rigorous risk management, and awareness that moments like October 2025 are not deviations but structural components of the crypto cycle.