Cryptocurrency Crash of 2025: Market Collapses but Seeks Support

The global collapse of cryptocurrencies in October 2025 was one of the most rapid in the past three years. Over the week, the total market capitalization decreased from $2.37 trillion to $1.68 trillion. The fear and greed index plummeted to 17 points — the zone of extreme fear. Bitcoin lost 28%, Ethereum 31%, and low-liquidity altcoins up to 60%. The market literally shrank under the pressure of macroeconomic and political factors, forming a new starting point.

Geopolitical Factor and Domino Effect

The main trigger for the cryptocurrency collapse was geopolitical pressure. Tariff increases and trade disputes between the US and China, sanction restrictions against Asian fintech companies, and instability in the supply of rare earth metals led to a rise in the dollar and mass exodus of investors from risky assets.

The impact of geopolitics on the crypto market intensified after the escalation of tensions in the South China Sea and a sharp drop in Asian indices. China tightened control over capital movements, and major OTC platforms reduced withdrawal limits. Investors began mass liquidation of losses, triggering a chain of liquidations.

Causes of the cryptocurrency collapse in October 2025: a combination of factors

October became a turning point for the digital market when accumulated tension resulted in a swift decline in prices. Several macroeconomic and technical factors coincided, triggering a chain reaction of sell-offs and loss of investor confidence.

The main reasons for the cryptocurrency price drop include:

1. The increase in the key interest rate by the US Federal Reserve to 6.25% and the reduction of the bond-buying program.
2. Mass liquidation of positions on the Binance and OKX futures exchanges — over $3.2 billion in a day.
3. Sharp decline in liquidity and increase in volatility, especially in BTC/USDT and ETH/USDT pairs.
4. Market pressure following Trump’s statement on the possible return of strict regulation of digital assets.
5. Strengthening of the dollar index and rise in US government bond yields to 5.8%.
6. Sharp decline in institutional investors’ interest in Bitcoin ETFs launched earlier in the year.

These events acted as triggers for instant panic selling. Algorithms on exchanges activated forced sales, intensifying the cascade of liquidations.

Trump’s Statement: Political Wave Against Crypto

Following Trump’s recent impact on the cryptocurrency market, the capitalization decreased by $400 billion. The former president accused the crypto sector of “undermining American dollar sovereignty” and announced plans to restrict operations with tokens not registered with the SEC.

The market perceived this as a threat to institutional trust. Bitcoin ETFs showed a negative inflow for the first time in four months. Traders closed long positions and began opening shorts at the $54,000 level, anticipating further decline. Not even key technical factors held support — RSI fell below 30 points, MACD formed a downward crossover, signaling a continuation of the downtrend.

Fear and Greed Index: Panic in Numbers

Against the backdrop of the cryptocurrency collapse, the fear and greed index showed a record low value in 26 months — 17 points.
The fear and greed index serves as a barometer of market psychology. Historically, readings below 20 points were recorded only during systemic crises — in March 2020 and November 2022.

Panic intensified after analytical platforms Glassnode and CryptoQuant reported an increase in Bitcoin withdrawals from exchanges — 45,000 BTC in three days. Traders prefer cold wallets, reducing turnover and exacerbating liquidity shortages.
Against this backdrop, volatility rose to 97 points on the BVOL index, exceeding the level of April 2022.

Fundamental and Technical Factors of the Decline

Fundamental indicators weakened synchronously with technical ones. A sharp 11% drop in Bitcoin network hashrate raised doubts about the stability of mining pools.
Fundamental reasons intensified with a decrease in institutional interest and mass outflows of capital from Grayscale and BlackRock ETFs.
Technical factors signaled a reversal long before the collapse — a 30% drop in trading volume, a decrease in average daily USDT turnover, and an increase in open interest on margin.

This forms a classic overheating pattern: excessive optimism is followed by a correction and mass position liquidation. The cryptocurrency collapse during this period confirmed the cyclical nature of the market, where each speculative interest spike is followed by a cooling-off point.

When Will the Cryptocurrency Market Recovery Begin: Recovery Scenarios

After the cryptocurrency collapse, analysts predict a gradual recovery in the first half of 2026.
Recovery is likely with the easing of the Fed’s policy, stabilization of the geopolitical situation, and a return of demand for risky assets.
The key indicator is the open positions volume on Bitcoin futures, which has dropped to $8.7 billion, 43% below July levels.

The recovery scenario depends on three parameters:

• Return of institutional capital to ETFs;
• Dollar stabilization;
• Increase in network transaction activity.

Most analysts expect a moderate Bitcoin price growth forecast in the range of $72,000–$78,000 in 2026, provided the macro environment stabilizes.

Cryptocurrency Collapse of 2025: Summary

The cryptocurrency collapse in the fall of 2025 was a painful but logical correction after a prolonged rise. The events of October cleared the market of excessive leverage, reduced overheated expectations, and refocused on real fundamental drivers.

The market is adapting, investors are revising strategies, and institutions are waiting. The decline became a reboot, not the end of the cycle.