Bitcoin’s Slide Deepens as Cash Dries Up and Big Buyers Step Back

With input from CNBC, Bloomberg, and Reuters.

Bitcoin’s sharp retreat below the $100,000 mark has rattled one of the market’s most momentum-driven trades, and investors are now asking a nervous question: is this just another shakeout, or the start of something much nastier?

After hitting a record high above $126,000 on Oct. 6, the world’s biggest cryptocurrency has been in near-constant reverse. It’s now down about 25% from that peak. On Friday, Bitcoin dropped under $95,000, with nearly all of its year-to-date gains wiped out and trading around $95,049. By Sunday afternoon, it had slipped even further, briefly breaking below $93,714 and changing hands at about $93,684 by 4:21 p.m. ET.

In other words: the euphoria didn’t just cool — it flipped.

Market watchers say this isn’t a single-driver story, but a two-stage downturn.

First came the macro shock. The turning point, according to Alessio Quaglini, CEO of digital-asset firm Hex Trust, was Oct. 10, when renewed US–China trade tensions triggered an across-the-board “risk-off” move in global markets. Comments on tariffs from President Donald Trump sent stocks sliding and dragged Bitcoin down with them.

“The general market is risk-off,” said Matthew Hougan, chief investment officer at Bitwise Asset Management. “Crypto was the canary in the coal mine for that, it was the first to flinch.”

Then came the second stage: forced selling.

In the days after that initial hit, Quaglini said there was a “full liquidation cascade that wiped out billions in leveraged positions.” Highly leveraged traders were forced out as margin calls kicked in and derivatives positions were blown up, amplifying every move lower.

“This is a liquidity reset, not a loss of belief in the asset,” Quaglini argued.

The idea is that there’s still faith in Bitcoin’s long-term story — but in the short term, there just isn’t enough cash or conviction to catch the falling knife.

That lack of liquidity is now front and center. Peter Chung, head of research at Presto Research, says trading conditions have been fragile ever since the “10/10 crash.”

“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,” he said.

With order books thinner than they looked at the highs, small flows can trigger outsized moves — in both directions. That’s great for traders hunting volatility, but unnerving for everyone else.

Macro headwinds aren’t helping. Hopes for a Federal Reserve rate cut in December are fading, and the recent US government shutdown, which put key economic data releases on pause, has further dented risk appetite. When investors are nervous about growth, rates and politics, speculative assets tend to be the first on the chopping block.

For much of the year, institutions and ETFs were the backbone of Bitcoin’s rally and its new-found “respectability.”

Spot Bitcoin ETFs pulled in more than $25 billion at one point, helping push total ETF assets to roughly $169 billion. Earlier, Bitcoin funds had even attracted more than $100 billion shortly after approvals, according to Tim Sun, senior researcher at digital-asset firm HashKey. Those steady inflows helped reframe the coin as a portfolio diversifier — a hedge against inflation, currency debasement and political chaos.

But that flow has reversed.

“The tightening of macro liquidity … has slowed institutional inflows significantly,” Sun said, adding that capital is now heading out of ETFs instead of in.

With the easy money gone and Fed cuts in doubt, institutions are no longer blindly averaging in at any price.

Jake Kennis, senior research analyst at Nansen, describes the current decline as a cocktail of “profit-taking by long-term holders, institutional outflows, macro uncertainty and leveraged longs getting wiped out.” The result, he says, is clear: after months of grinding higher, the market has “temporarily chosen a downward direction.”

The pullback has also exposed fatigue among some of Bitcoin’s loudest corporate champions.

One of the clearest examples is Michael Saylor’s Strategy Inc., once the poster child for using corporate balance sheets to lever up on Bitcoin. Its stock is now trading close to the value of its Bitcoin holdings, suggesting investors are no longer willing to pay a big premium for Saylor’s ultra-bullish strategy.

Across the crypto universe, smaller, illiquid tokens are getting hit even harder. A MarketVector index tracking the lower half of the 100 largest digital assets is down around 60% this year, reflecting how brutal the downturn has been away from the blue chips.

“The markets are always an ebb and flow, and cyclicality in crypto is nothing new,” said Chris Newhouse, director of research at Ergonia, which focuses on decentralized finance.

But sentiment has clearly soured:

“Amongst friends, Telegram chats, and at conferences, the general sentiment I’ve received shows skepticism around capital deployment, and no natural bullish catalysts.”

Few seasoned observers are calling a bottom here.

“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,” Quaglini warned.

Jeff Mei, chief operating officer at crypto exchange BTSE, agreed that further declines are very much on the table. Bitcoin, he said, is still trading like a classic risk-on asset — and with AI valuations under scrutiny and rate cuts in question, “a further decline in prices could be warranted.”

And yet, this doesn’t look like a repeat of the 2022 meltdown, when credit contagion and a string of blow-ups at lenders and exchanges nearly broke the entire ecosystem.

“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.

Despite the pain, a core group of long-term investors is staying calm — or even getting excited.

Some still see Bitcoin as a hedge against inflation, monetary debasement and long-run central bank money printing. For them, the current slide is uncomfortable, but not unexpected in an asset famous for 70% drawdowns and 13,000% rallies.

Chung advises retail investors to avoid trying to nail every short-term move. Instead, he suggests a dollar-cost-averaging strategy: buying small, regular amounts over time, similar to systematic investment plans, while focusing on understanding how the Bitcoin and Ethereum networks actually work rather than trading every headline.

Sun, meanwhile, says long-term buyers should wait for a macro turn, not just a technical bounce. Bitcoin’s next big run, he argues, depends on one thing above all:

“Global liquidity turning sustainably looser.”

Hunter Horsley, CEO of Bitwise, goes even further, calling current levels 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.

Horsley noted that Bitwise saw more clients add crypto in the past quarter than in any previous period in the firm’s seven-year history.

Boom-and-bust cycles are nothing new for Bitcoin. It rocketed more than 13,000% in 2017, only to plunge nearly 75% the following year. This time around, the backdrop is different — with ETFs, institutional allocators and corporate treasuries playing a bigger role — but the emotional script feels familiar.

“The sentiment in crypto retail is pretty negative,” Hougan admitted.

After living through multiple wipeouts, “they don’t want to live through another 50% pullback. People are front-running that by stepping out of the market.”

For now, Bitcoin remains the dominant force in crypto, accounting for almost 60% of the roughly $3.2 trillion market. But after a record high just weeks ago, the token’s latest slide has once again reminded everyone that in crypto, liquidity can vanish fast — and the ride down can be just as violent as the climb up.