On October 17, 2025, the cryptocurrency market experienced a significant downturn, with its total value falling by 4.9% to $3.67 trillion. This drop was part of a broader wave of risk-aversion, fueled by macroeconomic worries and a massive flush of leveraged bets, showing how quickly sentiment can shift in digital asset markets.
A Market in the Red
The sell-off was widespread, affecting nearly all major cryptocurrencies. Market data from the day paints a clear picture of the decline:
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Bitcoin (BTC) dropped 4.5% to $105,732, breaching its key 200-day simple moving average—a level often watched to gauge long-term trends. This break signaled a strengthening bearish sentiment.
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Ethereum (ETH) saw a 6% decline, falling to $3,764.
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Major altcoins like Binance Coin (BNB) and Dogecoin (DOGE) fell even harder, down 10% and 9.3% respectively.
This broad-based decline pushed the Crypto Fear & Greed Index down to 28, deep into “Fear” territory, indicating growing apprehension among traders and investors.
The Cascade of Liquidations
A key driver of the downturn’s severity was the liquidation of leveraged positions. When prices fall, traders who have borrowed money to amplify their bets can be forced to sell their assets to cover their loans, creating a vicious cycle of selling.
In the 24 hours leading up to October 17, nearly $1.2 billion in leveraged crypto positions were liquidated. The vast majority of these—around 79%—were long positions, meaning traders were betting on higher prices. This suggests the market was overly optimistic and ripe for a correction. Bitcoin, Ethereum, and Solana saw the highest liquidation volumes.
Macro Fears and Geopolitical Tensions
The crypto market didn’t fall in a vacuum. The drop was heavily influenced by a souring tone in global risk markets. Two major macroeconomic factors were at play:
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Renewed US-China Tensions: The announcement of potential new import tariffs sparked fears of a renewed trade war, causing investors to retreat from riskier assets like cryptocurrencies and technology stocks.
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Stress in the Banking Sector: Disclosures of fraud-linked loan exposures at US regional banks, such as Zions Bancorp and Western Alliance Bancorp, stoked fears of broader financial system instability. This pushed investors toward safer havens like government bonds, with the 10-year Treasury yield falling to its lowest level since April.
A “Controlled Deleveraging” Rather Than Panic
Despite the sharp price moves, some analysts framed the event not as a panic, but as a necessary and “controlled deleveraging”. Data showed that while speculative appetite declined, long-term capital held steady. Exchange open interest dropped to mid-year lows, and inflows into spot Bitcoin ETFs remained resilient, suggesting that core institutional investors were not fleeing the market but waiting on the sidelines.
The focus now shifts to upcoming catalysts, particularly the Federal Reserve’s October meeting, where traders are anticipating a potential interest rate cut that could restore risk appetite.
