According to Fortune, Bitcoin hit a low of under $87,000 on Thursday, down about 14% since last week and 31% from its October 6 all-time high of roughly $126,000. Ethereum dropped 13% to around $3,000 while Solana fell 9% to $139 in the past week. Crypto-focused public companies like Strategy and Circle saw even steeper declines of roughly 16% and 20% respectively. The rout began with an October 10 liquidation event that CoinGlass called the largest in history, triggered by Trump’s tariff threats against China. James Butterfill of CoinShares said markets are “flying blind right now” due to Fed uncertainty, while K33’s Vetle Lunde predicts Bitcoin will bottom between $84,000-$86,000 before recovering.
What’s driving the pain
Here’s the thing about crypto markets – they’re incredibly sensitive to macroeconomic signals. And right now, those signals are getting murkier by the day. The Federal Reserve’s hesitation on rate cuts has investors fleeing risky assets across the board. But crypto? It’s getting hit hardest because it’s still viewed as the riskiest of the risky.
That massive October liquidation event basically set the tone for this entire quarter. When traders get forced out of positions en masse, it creates a cascade effect that can take weeks to stabilize. Combine that with fading hopes for December rate cuts, and you’ve got a perfect storm for crypto assets.
The broader context
What’s really interesting is how this contrasts with earlier expectations. Remember when everyone thought 2025 would be crypto’s year thanks to Trump’s friendly regulatory stance? For most of the year, that narrative held up – Bitcoin actually outpaced the S&P 500. But since early October, it’s been a completely different story.
Now Bitcoin is down 31% while the S&P 500 gained about 3% over the same period. That divergence tells you everything about where investor confidence is right now. When uncertainty strikes, money flows back to traditional assets. It’s basically Risk-Off 101.
Reasons for optimism
Despite the bloodbath, some analysts see light at the end of the tunnel. Vetle Lunde from K33 makes a compelling case that this is temporary. He points to the broader institutional adoption we’ve seen this year and predicts Bitcoin will find its floor around $84,000-$86,000 before bouncing back.
His reasoning? Previous drawdowns have typically lasted more than 50 days, and we’re only on day 43 of this one. So if history rhymes, we might be nearing the bottom. Plus, his research suggests institutional money is still flowing into the space, just more cautiously.
What to watch
The big question everyone’s asking: When does the bleeding stop? Much depends on the Fed’s next moves and whether we get clearer signals about rate cuts. If you’re watching Ethereum or Solana, their recovery will likely follow Bitcoin’s lead.
Basically, crypto markets are in a holding pattern until macroeconomic uncertainty clears. But the underlying adoption story – particularly from institutions – remains intact. That might be the silver lining in this otherwise brutal quarter.
