Reasons for the Crypto Market Crash: A Temporary Storm with No Long-Term Consequences
Date: 2025-10-13 Author: Henry Casey Categories: BUSINESS
The sharp decline in cryptocurrency prices that occurred on October 11 was the result of a combination of technical factors and will not have a long-term impact on the market, according to experts from The Kobeissi Letter.
According to analysts, a massive liquidation of positions occurred amid the crash: the total volume of liquidations reached a record $19.3 billion, and Bitcoin recorded its first daily candlestick at $20,000. Excessive leverage, excessive risk, and US President Donald Trump's recent announcement to impose 100% tariffs on Chinese imports were cited as reasons for the sharp decline.
An additional catalyst was the fact that Trump's comments came after the stock exchanges closed, causing a liquidity shortage and increased volatility in the crypto market. Experts noted that most of the liquidations were on long positions—on some platforms, their share exceeded 90%, with the exception of Bitfinex. Moreover, the decline began even before the president's official statement, indicating that a correction was already underway, and the political factor merely accelerated it.
"This was a confluence of technical circumstances that had been brewing for a long time. We see no fundamental threats and remain confident in further market growth," analysts at The Kobeissi Letter emphasized.
Santiment experts also believe that looking for a single cause for the decline is misguided. They believe that retail investors' desire to attribute the collapse to a specific event reflects typical rationalization. However, they agree that future market sentiment will depend on US-China relations. Optimistic news could restore interest in risky assets, while rising tensions will fuel fears and trigger predictions of "Bitcoin below $100,000."
The crypto market's Fear and Greed Index fell sharply from 74 to 24, indicating "extreme fear." Analysts attribute this to the overall decline in the stock market, as in times of uncertainty, investors prefer more stable assets like gold and silver, which continue to rise.
"Despite its status as an alternative asset, Bitcoin remains sensitive to global political events and risk sentiment. It behaves more like a speculative instrument than a safe haven," Santiment noted.
Nevertheless, some traders see the decline as the beginning of a new bullish cycle. Alex Becker believes the current correction reflects excessive investor impatience, and selling assets now is a mistake. Analysts Benjamin Cowen and Samson Mow also expect Bitcoin to resume its rise, while economist Timothy Peterson believes the market will enter a "cooling phase" before a new rally within three to four weeks.
According to CryptoQuant, Bitcoin retains growth potential: trader Peter Brandt predicts a possible $185,000 level, while Frank Fetter believes the overbought zone will occur around $180,000.
