Bitcoin 2025 disaster year: $190 billion liquidation hits a record high

Bitcoin is at risk of ending the full year lower for the first time since 2022 after experiencing record highs and a sharp sell-off in 2025. After hitting an all-time high of $126,000 in early October, Trump announced new tariffs on Chinese imports on October 10, triggering the forced liquidation of more than $190 billion in cryptocurrency leveraged positions, setting a record for the largest liquidation in cryptocurrency history.

The tariffs on October 10 triggered the largest liquidation in history

! Bitcoin Daily Chart

(Source: Trading View)

Bitcoin hit an all-time high above $126,000 in early October, but just days later, the market plummeted again on October 10 when Trump announced new tariffs on Chinese imports and threatened export controls on critical software. This triggered the forced liquidation of more than $190M in cryptocurrency leveraged positions, setting a record for the largest liquidation in cryptocurrency history.

This disastrous liquidation event underscored the high-leverage nature of the crypto market. During Bitcoin’s impact on all-time highs, a large number of investors used 10x or even 50x leverage to go long, and when the price suddenly reversed, these high-leverage positions quickly triggered forced liquidation. The liquidation triggered more liquidations, creating a waterfall crash that saw Bitcoin drop from $126,000 to near $95,000 in a matter of hours, a drop of over 24%.

Since then, Bitcoin has struggled to recover, recording its biggest monthly decline since mid-2021 in November. Although the bearish sentiment in the options market has eased slightly recently, according to options platform Derive.xyz, overall market confidence has been hit hard. As of the end of last week, traders were pricing in a 15% chance of Bitcoin falling below $80,000 by the end of the year, down from 20% a few weeks ago. This remains a blow to crypto bulls.

Bitcoin has fallen about 6% so far this year, putting it on track for its worst annual performance since the crypto winter of 2022, when the cryptocurrency’s value evaporated by more than 64%. For the first time since 2014, the token has diverged significantly from stock movements, while the S&P 500 index has seen a strong 16% increase. This divergence highlights the unique pressure Bitcoin faces in 2025.

The Painful Lesson of Institutional Predictions for Comprehensive Overturns

MicroStrategy CEO Phong Le predicted on October 30 that Bitcoin would reach $150,000 this year, a target that seems ridiculous today. Standard Chartered analysts predicted last year that Bitcoin would reach $200,000 by the end of 2025, partly due to inflows into Bitcoin exchange-traded funds (ETFs). However, according to media reports, Standard Chartered had lowered its forecast to $100,000 in October, acknowledging that its core assumptions had failed.

In a podcast episode last month, Phong Le warned of a potential “Bitcoin winter.” In an interview with Reuters last week, MicroStrategy founder Michael Saylor said that his company could survive even if the price of Bitcoin fell by 95%. The discussion of this extreme scenario itself shows how far institutional concerns about the current market have reached.

Wall Street has been lowering its expectations for the cryptocurrency industry. Standard Chartered Bank has lowered its year-end Bitcoin price target from $200,000 to $100,000, a 50% halving. Geoff Kendrick, the company’s head of digital assets, also lowered his 2026 target from $300,000 to $150,000. This significant correction shows that even the most optimistic institutions have to face reality.

Failure cases of the three major institutional predictions in 2025

MicroStrategy Prediction $150,000: Released on October 30, Bitcoin began to crash two weeks later, with an error of over 60%

Standard Chartered Bank Forecast $200,000: Released in 2024, forced downward downward to 100,000 in October 2025, admitting mistakes

Bloomberg Intelligence Predicts Continued Gains: Underestimating the systemic impact of DAT pattern breakdowns and institutional selling pressure

The common reason for the failure of these predictions is over-reliance on a single driver (ETF and DAT buying), ignoring macroeconomic risks and the fragility of market structures.

The Underlying Reasons for the Surge in Correlation with Stocks

Bitcoin’s correlation with stocks has increased significantly this year. LSEG data shows that Bitcoin’s average correlation with the S&P 500 index in 2025 is 0.5, compared to 0.29 in 2024. The average correlation between Bitcoin and the Nasdaq 100 in 2025 is 0.52, compared to 0.23 in 2024. This multiplication of correlation means that Bitcoin is losing its uniqueness as an alternative investment.

Historically, the trend of Bitcoin and stocks has not been synchronized, as cryptocurrencies are seen as alternative investments. However, analysts note that the correlation between the two appears to be increasing as traditional retail investors and some institutions adopt cryptocurrencies more widely. Jasper De Maere, a strategist at crypto algorithmic trading firm Wintrimute, said: “The response of cryptocurrencies to the overall stock market is a consistent theme in 2025.”

The underlying reasons for this heightened correlation are threefold. First, the introduction of Bitcoin ETFs has made it easy for traditional stock investors to allocate Bitcoin, which sees Bitcoin as part of their portfolio rather than as a standalone asset class. Secondly, institutional investors will adjust Bitcoin and stocks together with risk management, and when market sentiment turns to risk aversion, the two will reduce their positions simultaneously. Thirdly, the valuation bubble of AI stocks resonates with the speculative nature of Bitcoin, both relying on investor sentiment and risk appetite.

Cosmo Jiang, general partner at cryptocurrency investment firm Pantera Capital, said: “After October 10th, cryptocurrencies have been somewhat weak. In recent weeks, cracks have really begun to appear in the risk asset market because the logic of the AI bull market has been questioned.” When leading AI stocks such as Nvidia and Microsoft pulled back due to overvaluations, Bitcoin also fell in tandem, a linkage effect that will not be obvious in 2024.

Analysts expect that next year, Bitcoin may become more closely linked to the factors driving stocks and other risk assets, such as changes in monetary policy and concerns about high valuations in AI-related stocks. This means that investors can no longer view Bitcoin as a hedge against stock market risks, but must consider it in the overall risk asset allocation framework.

2026 Outlook and Investment Strategy Adjustments

Cryptocurrencies soared earlier this year with the election of crypto-friendly Trump as president of the United States, but quickly rebounded in April after Trump announced a plunge in tariffs. However, another plunge in October showed that policy uncertainty has become Bitcoin’s biggest risk factor. Although the Fed’s interest rate cut expectations are positive in the short term, if interest rate cuts slow or pause, it may trigger a new round of selling.

For 2026, investors need to adjust their strategies. It can no longer be assumed that Bitcoin will provide protection in the event of a stock market crash, as the two may fall in tandem. A more prudent approach is to reduce leverage, diversify allocation, and keep an eye on macro policy changes.