The great cryptocurrency crash of 2025 entered a new phase on Wednesday, after Bitcoin plunged to a seven-month low, continuing a collapse that has wiped out more than $1 trillion in the digital asset market.
The largest cryptocurrency fell to $88,522 in New York trading, with the downward trend spreading to investors large and small, from individual buyers who took advantage of the decline, to companies that hold cryptocurrency, whose stock premiums are fading.
Prices rose from the lows late in the day after Nvidia delivered strong revenue forecasts, helping to calm concerns that the global AI spending boom was fading.
The next psychological thresholds are around $85,000 and $80,000, with a focus on the 2025 low of $77,424, recorded during the tariff turmoil in April.
Market capitalization falls to $3.2 trillion
The total market capitalization of cryptocurrencies peaked at $4.3 trillion on October 6 and is now approaching $3.2 trillion. However, much of this decline reflects book losses rather than an actual outflow of liquidity.
Following a series of forced sell-offs on October 10, when over $19 billion in debt-funded positions were wiped out, the market's fragility became glaringly apparent. This triggered a flurry of margin calls, outflows from exchange-traded funds (ETFs), and a decline in interest from new buyers.
James Butterville, head of research at CoinShares, said investors are groping their way in the dark, have no macroeconomic guidance, and all they see are the movements of whales on the chain, and that worries them.
Bitcoin’s rise to just over $126,000 earlier this year was based on two key pillars: expectations of multiple interest rate cuts by the Federal Reserve, and increasing adoption by financial institutions.
But both narratives faltered as momentum-driven investors withdrew from the market. The losses dealt a severe blow to digital treasury companies, whose valuations were built on the previous rally.
Ether gives up its gains and falls below $3,000
Meanwhile, Ether has fallen back below $3,000. After lagging behind Bitcoin in the first half of the rally, the second-largest cryptocurrency surged to nearly $5,000 in August, briefly surpassing its 2021 high. But it has since relinquished those gains.
Matthew Hogan, chief investment officer at Bitwise Asset Management in San Francisco, said: “I think we are closer to the end of the sell-off than the beginning, but the markets are uneasy, and cryptocurrencies may see further declines before they find a base to bounce back.”
