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Bitcoin dropped over 10% after hitting a record high of $126K amid slowing ETF inflows.
Massive $19B liquidations exposed heavy leverage in crypto markets.
Rising global tariffs and weaker blockchain activity add selling pressure.
Bitcoin recently climbed to a record high, touching nearly $125,000 to $126,000, backed by strong demand through exchange-traded funds (ETFs). The rally surprised many markets. However, after that peak, Bitcoin dropped sharply.
As of mid-October 2025, the BTC price fell to about $111,000, representing a pullback of over 10% in a short span. The speed and size of the fall surprised many traders and showed how fragile momentum can become in volatile markets.
ETFs played an important role in the rally. Institutional and retail money poured into spot Bitcoin ETFs, creating significant new demand. One report shows total ETF inflows for 2025 have already reached nearly $48.7 billion, surpassing the total for 2024. These flows pushed the price higher by adding fresh capital.
However, signs now point to weakening ETF inflows just as the market faces turbulence. Some data suggest ETFs have started showing mild outflows during the recent drop. The weakening flows reduce the “fuel” that drove the rally. Without strong new demand, the correction may deepen before a sustainable rebound occurs.
On October 10 and October 11, the market faced its most dramatic liquidation event ever. Over $19 billion of leveraged positions in derivatives markets disappeared in hours. Bitcoin fell as low as $104,783 at one point, losing more than 14% from the highs.
Much of that drop came as traders who had borrowed to amplify gains got forced to close positions when margin calls hit. The cascade effect magnified selling pressure. Some analysts suspected a coordinated attack using oracle or price-feed manipulation to trigger cascading liquidations. Even if that claim remains uncertain, the event left markets shocked and momentum broken.
Also Read: Is Bitcoin Ready to Bounce Back? Key Price Levels to Watch
On the blockchain and trading metrics side, some red flags appeared during this reversal. Long-term holders began to sell large portions of their BTC holdings. This behavior reduced the cushion of supply held off exchanges and signaled the drop in confidence among long-term participants.
Other indicators show that speculative leverage has faded. The estimated “leverage ratio” (a measure of exposure relative to available collateral) dropped to multi-month lows. Futures open interest also contracted sharply. These metrics suggest many leveraged bets got wiped out, and the market now lacks the same speculative firepower it had during the rally.
The broader economic and political environment added stress. Ongoing trade tensions between the US and China, especially sudden announcements of heavy tariffs, have increased uncertainty across financial markets. Bitcoin’s price reacted sharply to these external shocks. On days when trade news turned sour, Bitcoin quickly erased gains and faced renewed selling pressure.
Central bank policy also remains crucial. Many investors expect more rate cuts by the US Federal Reserve by the end of the year. If data on inflation or employment disappoint, those expectations could reverse, weakening risk assets like Bitcoin. Thus, macro surprises can turn the mood swiftly from bullish to cautious.
One likely path is a short but sharp pullback - a “shakeout.” In this situation, Bitcoin drops further, forcing weak hands out, then rebounds once ETF flows resume and buyers step in. That path often builds stronger bases and renews conviction.
The other path leads to more prolonged consolidation or a deeper correction. In that scenario, price could drop into a broad range or even retest lower support zones such as $105,000 to $110,000. Without renewed demand, the market may wander sideways or slip further before regaining momentum.
Also Read - Bitcoin & Ethereum After Crypto Crash: What to Expect Next
Recent price action supports the risk of another drop. After rebounding somewhat, Bitcoin failed to hold above $116,000, triggering additional liquidations worth $125 million in derivatives markets. The failure to break decisively higher signals resistance remains strong. In addition, ETF flows have weakened after the liquidation event, and on-chain data indicate further distribution by long-term holders.
Technical analysis highlights that the current support zone around $110,000 to $111,000 has become critical. If price loses that zone, it opens the path toward deeper support bands around $105,000–$108,000.
Markets often take two steps forward and one step back. In a rally driven by heavy inflows and leverage, a purge or shakeout can help clear excess and stabilize the structure. The recent liquidation removed much of the extreme leverage. Without that cleaning, a push toward new highs would build upon unstable footing.
Additionally, weaker ETF inflows suggest fewer buyers at the margin, lowering the probability of a smooth, straight shot upward. The market needs time for demand to replenish, confidence to return, and weaker positions to exit. In that context, a further retreat may serve as a necessary reset before another sustained advance.
Bitcoin showed strength in early October 2025 owing to massive ETF demand. However, the subsequent collapse, fueled by extreme leverage and negative macro surprises, exposed the fragility beneath the surface.
On-chain metrics and holder behavior now signal risk. Unless ETF flows revive forcefully, another leg downward appears plausible before Bitcoin can stage a reliable run to new all-time highs. Markets tend to correct before rising again, and all the factors appear lined up for such a setup.
1. Why did Bitcoin drop after reaching its all-time high?
Bitcoin fell over 10% after hitting $126,000 due to heavy profit-taking, slowing ETF inflows, and mass liquidations worth over $19 billion.
2. How are ETFs influencing Bitcoin’s price movement?
ETFs drive institutional demand for Bitcoin, but when inflows slow or reverse, they can quickly trigger price corrections due to reduced buying pressure.
3. What role do global tariffs play in Bitcoin’s volatility?
Trade tensions and new tariffs between major economies create uncertainty, pushing investors to rebalance risk assets like Bitcoin, leading to price swings.
4. How does blockchain data show signs of market weakness?
On-chain data reveals long-term holders are selling and leverage levels have dropped, signaling caution and potential short-term weakness in the market.
5. Will Bitcoin reach a new all-time high soon?
Analysts believe Bitcoin could face another correction before setting new highs, as markets stabilize and ETF inflows regain momentum.
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