The cryptocurrency market experienced a significant decline, losing almost $200 billion in value as rising trade tensions between China and the United States reignited fears on a global scale.
This development interrupted Bitcoin’s tentative recovery, following a record liquidation of $19 billion over the weekend.
Challenges for Bitcoin prices
According to data from CryptoSlate, the total market capitalization of the industry fell 3% to $3.79 trillion, down from $3.96 trillion just a day prior.
Bitcoin has faced difficulties maintaining its position above the $115,000 resistance, dipping over 3% to $110,500, which is now testing a crucial short-term support zone.
Ethereum, the second-largest cryptocurrency by market capitalization, also reflected the downward trend. ETH fell 4% below the $4,000 level before seeing a minor recovery, while BNB experienced a 12% decline from its recent all-time high, sitting at $1201 at the time of this report.
Additionally, other major digital assets like XRP, Solana, Dogecoin, Tron, and Cardano recorded declines of over 5% during the reporting period, exacerbating the day’s losses.
This broader sell-off was a response to China’s reported announcement of new sanctions targeting five US subsidiaries of Hanwha Ocean, a prominent South Korean shipbuilder.
The decision effectively barred Chinese entities from dealing with the sanctioned companies, marking a significant escalation in the ongoing conflict between Beijing and Washington.
This action is unsurprising, considering that the Chinese authorities had warned on October 13 via X that “[they] will take necessary measures to safeguard their legitimate rights and interests.”
Beijing’s restrictions were also implemented shortly after US President Donald Trump threatened to impose 100% tariffs on specific Chinese imports in reaction to new export controls.
ETF outflows highlight market wariness
The macroeconomic stress has compounded existing weaknesses in cryptocurrency markets following the recent liquidation event.
On October 13, US spot Bitcoin and Ethereum ETFs saw combined outflows of approximately $755 million, indicating ongoing caution from institutional investors.
Data from SoSo Value shows that Bitcoin-linked funds experienced $326 million in redemptions, primarily due to withdrawals from Grayscale’s GBTC and Bitwise’s BITB.
Other fund issuers, like Fidelity, also noted significant outflows, while BlackRock’s IBIT was the lone exception, attracting fresh capital inflows of around $60 million.
Conversely, Ethereum ETFs underperformed, with an estimated $428 million in withdrawals led by BlackRock’s ETHA product.
Despite this, Bitcoin and Ethereum products have continued to experience remarkable success this year, drawing in over $76 billion in combined inflows since their inception in 2024.
What’s next for Bitcoin prices?
Timothy Misir, head of research at BRN, informed CryptoSlate that Bitcoin’s immediate technical range lies between $110,000 and $108,000.
This zone represents a key liquidity band for the market. He suggested that a decisive breach below this range could lead to a decline towards $104,000, while a recovery and close above $115,000 would likely stabilize short-term momentum and keep the $125,000 target within reach.
Misir also remarked that decreasing open interest implies that crypto traders are reducing their risk exposure, which diminishes the likelihood of sudden liquidations. However, any potential upside will likely depend on real spot demand rather than leveraged activity.
He emphasized that ongoing ETF inflows exceeding $500 million daily would serve as a clear indicator of market resilience.
Misir concluded:
“The market is now in a risk-management phase: institutional flows are neutral to negative, and many leveraged participants have exited. Consequently, prices are mainly influenced by spot reallocations and macro news, which lessens the chances of immediate breakouts or leverage-driven crashes.”
