A shock born of geopolitics and global finance
The fall of bitcoin began amid escalating diplomatic tensions between the United States and China. In early October, Beijing announced strict controls on rare earth exports in response to new tariff threats from Washington. On October 10, fears of a trade war between the two superpowers caused a flash crash on global markets: the Nasdaq 100—the barometer of US tech stocks—fell 3.56% in a single session, its worst performance since the spring, while Bitcoin, which is strongly correlated with tech stocks, faltered sharply in its wake. It has never recovered.
Bitcoin price
The shockwave swept away all risky assets: the capitalization of cryptocurrencies melted away by around $400bn in 24 hours, a historic record, under the effect of a cascade of liquidations on leveraged positions. On the same day, Wall Street saw $2 trillion evaporate from US stocks, a sign of the scale of the panic.
The turbulence in October was exacerbated by an uncertain economic and monetary environment. In the United States, the budget shutdown interrupted the publication of official macroeconomic indicators for more than 40 days, forcing investors and the Federal Reserve to navigate by sight in a statistical fog. At the same time, US inflation began to accelerate again at the end of the year, and the stratospheric stockmarket valuations of artificial intelligence leaders fueled fears of a speculative bubble.
Trading Economics
Result: hopes for imminent monetary easing have been greatly reduced. The probability of a Fed rate cut in December—which seemed almost certain a month earlier—had fallen to 48% in mid-November, according to CME FedWatch.
Target Rate Prpbabilities for 10 Dec. 2025 Fed Meeting
CME FedWatch
In other words, we have gone from an almost unanimous expectation of a rate cut at the December 10 meeting to only a 50-50 chance. However, risky assets such as Bitcoin have historically been very sensitive to these rate prospects: the drying up of liquidity and the rise in the cost of money have inexorably undermined the appeal of the crypto market in the eyes of many institutional investors.
MacroMicro
Panic selling and contagion in the crypto market
In addition, institutional investors have begun to flee the market. Bitcoin-backed exchange-traded funds (spot ETFs) have recorded net outflows of more than $3.1bn since the end of October. On November 13 alone, Bitcoin ETFs suffered $866.7 million in withdrawals—the second-largest daily outflow since their launch in 2024 (only February 25, 2025, was worse, with $1.1bn withdrawn). In total, nearly $2.6bn has fled these products in the space of three weeks, reflecting a sharp risk-off movement among professional players.
SoSoValue
These waves of successive redemptions reflect rising risk aversion: managers are reducing their exposure to volatile assets.
And, as is often the case, when the king falters, his entire court reels. The entire cryptocurrency market has fallen in tandem. Its total capitalization, which peaked at around $4.27 trillion in early October, has plummeted to around $3.09 trillion today. This drop of around 27% represents more than $1.2 trillion in value evaporated in a matter of weeks.
The shockwave has reached ether (ETH), the market's number two, which has fallen back to around $3,000, with a capitalization of around $366 billion: down 9.2% since the beginning of the year and 21% since November 1. XRP (XRP), which was still in positive territory for the year at +3.5%, has not escaped the correction, falling 13.6% since November 1 to around $2.16 and a market capitalization of $130bn. BNB, one of the few major tokens still, clearly in the green in 2025 (+30% since January 1), has also been caught up in the storm: down 16% since the beginning of November, at $912 and a market cap of $125bn. Solana (SOL), which is more volatile, is down 27% for the year and 26% since November 1, trading at around $137 with a market capitalization of close to $76bn.
In short, when Bitcoin sneezes, the entire cryptosphere catches a cold: the correlation between different digital assets has proven to be extremely strong during this debacle.
Companies exposed to cryptocurrencies have not been spared. On the stock market, shares in the sector plummeted in the wake of the crash: Coinbase, the leading US-listed exchange platform, has fallen 34% since October 10, while investment company Strategy—known for its bitcoin holdings—has seen its share price drop 39.5% over the same period. Other players such as Galaxy Digital (-41%) and MARA (-44%) also suffered heavy losses on the stock market.
A look back at a meteoric rise
Paradoxically, this sudden reversal comes after two years of almost uninterrupted euphoria surrounding crypto-assets. From early 2023 to fall 2025, Bitcoin's price increased nearly sixfold, driven by unprecedented enthusiasm from individual and institutional investors.
Several factors fueled this spectacular rise. On the one hand, new US regulations looked set to be more favorable to cryptocurrencies—with President-elect Donald Trump promising to make the US the "crypto capital" of the world, while appointing pro-Bitcoin figures to key positions—which boosted market confidence. On the other hand, institutional appetite played a major role: the approval in early 2024 of several spot Bitcoin ETFs in the United States opened the floodgates to massive capital flows into the sector. More than $121 billion is concentrated in these exchange-traded products, representing 6.6% of all bitcoins in circulation. These inflows fueled the rise, providing the general public with easier access to bitcoin through regulated exchange-traded products.
The macroeconomic environment also played in favor of cryptocurrencies during this bullish phase. After a difficult 2022, the US Federal Reserve finally lowered its rates starting in 2024 in response to slowing inflation.
Trading Economics
In addition, promising narratives—such as the planned scarcity of the asset (halving in April 2024) and the fleeting appeal of its decorrelation from traditional markets—have convinced new entrants to position themselves on Bitcoin as an alternative store of value. At its peak, Bitcoin's market capitalization flirted with $2.5 trillion and represented about 60% of the value of the entire crypto market.
What does on-chain analysis tell us?
An on-chain analysis tool, i.e., a tool that directly observes transactions on the Bitcoin network, is rich in insights. This tool is called "Realized Cap HODL Waves."
The tool combines two concepts. First, HODL Waves: all bitcoins are classified according to the "age" of their last movement (moved a week ago, 1–3 months ago, 1–2 years ago, 5+ years ago, etc.) to see what proportion of the supply is held by short-term or long-term holders.
Second, Realized Cap: instead of valuing each bitcoin at market price, it is valued at the price at which it was last moved, which gives a sort of aggregate "book value" of acquisition costs.
By merging the two, we can see what proportion of the purchase cost value is held by recent or long-term holders. In the charts below, when the "young" waves swell, this reflects a rapid rotation to new buyers and potentially more volatile phases of euphoria; when the "old" waves grow, this signals accumulation by long-term holders, a more rigid supply, and, in general, less selling pressure. This tool thus helps to read the phases of the cycle and the dynamics of supply and demand.
Chart 1 (below): 0–6 months — Share of Realized Cap held by recently moved bitcoins: if the curve rises, new buyers dominate and volatility increases.
Chart 2 (below): 2–10 years — Share of Realized Cap held by long-term holders: if the curve rises, supply becomes scarcer and selling pressure decreases. Conversely, if the curve falls, these holders spend more, supply loosens, and potential selling pressure increases.
We can therefore see that currently, the share of recent coins (0–6 months) is rising while that of long-term holders (2–10 years) is falling: bitcoins that have been dormant for a long time are being put back into circulation (profit-taking by old holders) and bought back by new entrants.
Towards a new era of caution?
The crash of fall 2025 was a turning point for the crypto ecosystem. On the one hand, it highlighted the growing dependence of cryptocurrencies on global macroeconomic conditions. Unlike the crypto winter of 2022 (precipitated by internal scandals such as FTX and Terra/Luna), the 2025 debacle was not caused by a failure specific to the sector: there was no major fraud or platform bankruptcy to explain the crash.
External factors—monetary policy, geopolitical tensions, stock market sentiment—dictated the trend. In short, Bitcoin behaved like any other risky asset, sensitive to the same fears as the Nasdaq or tech stocks, marking a turning point from the days when some saw it as uncorrelated "digital gold."
On the other hand, the crisis served as a full-scale test for the new crypto market infrastructure, with rather reassuring results. Bitcoin ETFs, for example, fulfilled their role without any major hiccups: despite massive redemptions, these funds were able to honor their clients' withdrawals smoothly, thanks to the authorized participants mechanism, which absorbed the sales without creating any disruption. There were no forced closures or prolonged suspensions of these vehicles, demonstrating a certain maturity on the part of the industry. Similarly, the major exchange platforms generally held up well in the face of unusual volumes, despite a few isolated slowdowns—Binance, for example, compensated users affected by a brief pricing anomaly on a stablecoin during the crash. These factors suggest that the crypto infrastructure has remained robust and has gained resilience since the turmoil of 2022.
For investors and companies in the sector, the time has come for renewed caution. The most optimistic observers point out that this purge of speculative excess was undoubtedly necessary to start again on a sound footing: weak hands have capitulated and leveraged positions have been eliminated, which could pave the way for a new, more sustainable bull cycle. Other observers, on the contrary, believe that this shock marks the beginning of a prolonged market consolidation.
Beyond technical considerations, the real catalyst for a strong recovery could be macroeconomic. If inflation moderates and the Federal Reserve gains the leeway to cut rates in 2026, risk appetite could gradually return, benefiting crypto-assets. Conversely, maintaining a strict monetary policy would prolong the liquidity drought and weigh on this speculative market for the long term. The international scene will also play a role: an easing of geopolitical tensions (e.g., in Sino-American trade) would be likely to restore global investor confidence, while new shocks (financial crisis, etc.) could increase mistrust of volatile assets such as Bitcoin.
