The global crypto market witnessed a massive correction this week, with Bitcoin and Ethereum leading a sharp sell-off that erased billions in value within hours.
Driven by US–China trade tensions, a surging dollar, and over $5 billion in leveraged liquidations, the downturn has left traders shaken — but analysts say it could mark a healthy reset within the ongoing 2025 bull cycle.
Bitcoin (BTC) plunged nearly 7.5% to $112,578, while Ethereum (ETH) dropped 13% to $3,799, following Bitcoin’s brief rally to an all-time high of $125,456 earlier in the week.
The retracement triggered widespread profit-taking across exchanges and is consistent with historical post-ATH corrections, where Bitcoin typically declines by 10–15% before stabilizing.
Data from CoinGlass revealed that over $5.6 billion in leveraged long positions were liquidated within 24 hours — one of 2025’s largest single-day liquidation events. Analysts now identify $109,000–$114,000 as Bitcoin’s critical support zone, while Ethereum traders are eyeing $3,500 for signs of a rebound.
Macroeconomic jitters deepen market volatility
The sell-off intensified after Washington announced 100% tariffs on Chinese tech imports, escalating fears of a renewed US–China trade war. The news pushed the U.S. dollar index (DXY) above 107 — its highest since early 2024 — while the 10-year Treasury yield hovered near 4.65%, tightening liquidity for speculative assets like crypto.
As institutional investors de-risked exposure, the crypto market saw a sharp contraction in trading volumes. Analysts warn that until trade tensions cool and the dollar weakens, crypto assets may remain under pressure. Historically, risk-on assets like Bitcoin tend to lag in recovery during such macroeconomic stress periods.
ETF delays add to investor frustration
Adding to the sell pressure, spot ETF approvals for Solana and XRP were delayed due to the U.S. government shutdown, freezing multiple filings under the SEC.
The delay stalled institutional inflows that had been driving optimism in recent months. Solana (SOL), which had surged to $218, fell back to $172 after the announcement. Despite the pause, crypto ETFs have attracted over $18 billion in cumulative inflows since January 2025, showing that investor appetite remains intact — though temporarily restrained.
Altcoin market faces brutal shakeout
The correction wasn’t limited to Bitcoin and Ethereum. Altcoins suffered a massive wipeout, with many losing up to 80% of their value within hours. Analysts say this was not a random correction, but rather a calculated reset triggered by large institutional players.
Over the past two months, retail traders had aggressively leveraged long positions, creating a fragile market setup. Once Bitcoin reversed, algorithmic liquidations cascaded through exchanges, automatically selling off positions and accelerating the crash.
This chain reaction cleared overleveraged positions, drained excess liquidity, and left only strong holders in the market — a necessary purge, according to seasoned traders.
Market observers believe that whales and institutions anticipated the leverage build-up. They waited until sentiment peaked, then triggered a reversal at Bitcoin’s all-time high, setting off billions in forced liquidations.
As a result, the crash not only wiped out speculative traders but also reset leverage ratios across exchanges — a step that often precedes the next major bull leg.
Why this could be healthy reset
Analysts note that every bull cycle includes a “cleansing event” — a moment when excessive leverage and unrealistic optimism are flushed from the market.
If Bitcoin holds above $109,000, it could soon rebound toward $120,000, marking the start of a new accumulation phase. Historically, once Bitcoin stabilizes, altcoins tend to rally 10x–20x as fresh liquidity flows back in.
Industry expert Rafael Bejar, founder of UI Technologies, summarized it well:
“Markets may look ugly in the short term, as it often occurs after a pullback. But pullbacks deploy the next wave of exponential growth.”
