Bitcoin bear market could deepen further as liquidity worries take hold
Bitcoin’s retreat below $100,000 has shaken one of the world’s most momentum-driven trades, raising questions whether the sell-off is just another shakeout or the start of something deeper. Bitcoin fell below $95,000 on Friday, with nearly all its gains so far this year getting wiped out. The cryptocurrency has hit a few stunning milestones in 2025. It rose to an all-time high crossing $126,000 on Oct. 6 before sliding just a few days later. It has lost about 25% since the October high, in signs of a deepening bear market, and is currently trading at $95,049. Industry experts point to a two-stage downturn: an initial macro-driven sell-off, followed by forced liquidations. However, longer-term investors argue that the foundations of the digital-asset story remain in place. Some investors still view bitcoin as a hedge against currency debasement, inflation, and long-term monetary expansion. The turning point, said Alessio Quaglini, CEO of digital asset solutions company Hex Trust, came on Oct. 10, when renewed U.S.-China trade tensions triggered an immediate sell-off in broad risk assets. In the days that followed, there was a “full liquidation cascade that wiped out billions in leveraged positions.” “This is a liquidity reset, not a loss of belief in the asset,” he said. Beyond bitcoin, the broader crypto complex has also come under pressure. The second most popular cryptocurrency, ether, has lost over 35% from its August high of $4,954. While tensions between the two economic superpowers have since thawed , the bitcoin market has struggled to find its footing. Peter Chung, head of research at Presto Research, said that “the thin liquidity since the 10/10 crash and the fear of the four-year cycle coming to an end are the main culprit … even a small routine trade can cause price swings.” Macro headwinds are also piling on pressure. Hopes for a Federal Reserve rate cut in December are fading, with the U.S. government shutdown that put economic data releases on hold also denting sentiment. Digital asset financial services firm HashKey’s senior researcher Tim Sun said the tightening backdrop has hit ETFs particularly hard. “Bitcoin ETFs attracted over USD 100 billion shortly after approval, but the tightening of macro liquidity … has slowed institutional inflows significantly,” he said. In fact, that capital is now on its way out, Sun said. More declines to come? Few expect the pull back to reverse any time soon. “We have to be honest: this correction may not be finished … if equities roll over we could easily retest the low $70Ks, maybe briefly below,” said Quaglini. Jeff Mei, chief operating officer at cryptocurrency exchange platform BTSE, echoed that more declines could follow, adding that bitcoin was still behaving like a classic risk-on asset, and that with AI valuations under scrutiny and rate cuts in doubt, a “further decline in prices could be warranted.” However, market watchers emphasize that this reset looks very different from past crises. “This is not 2022 — there’s no credit contagion, no cascading insolvencies, no systemic failure,” Quaglini said. “Once conditions stabilize … we still expect bitcoin to make new highs” over a 12 to 18 month horizon. Chung said retail investors should avoid trying to time short-term swings, while suggesting to take the dollar-cost-averaging approach, or buying small amounts over time, similar to systematic investment plans, and focusing on understanding the underlying bitcoin and Ethereum networks rather than trading headlines. Sun added that long-term buyers should wait for a macro signal, not a technical one. Bitcoin’s upside, he said, hinges on global liquidity turning sustainably looser. Hunter Horsley, CEO at asset management firm Bitwise meanwhile, sees current levels as potentially attractive for strategic investors. “A way of looking at prices right now is that it’s a reasonable entry point … the setup is quite constructive indeed,” he said, noting that Bitwise saw more clients investing in in crypto just the past quarter than ever before in the seven year history of the company.
