Bitcoin Plunges 20% From Record High as Profit-Taking and Liquidations Hit Crypto Markets
Bitcoin extended its decline on Friday, dipping below $100,000 for the first time in six months and leaving investors questioning whether the latest crypto bull run has reached its limits. The world’s largest cryptocurrency is now down nearly 20% from its record high above $126,000 set in early October.
After a year of continued gains fueled by ETF inflows and institutional adoption, profit-taking by early investors, heavy leveraged unwinds, and a strengthening U.S. dollar combined to knock Bitcoin off its peak. Analysts warn the sell-off could deepen before finding a durable floor.
Profit-Taking and Long-Term Holders Exit
According to blockchain data firms, long-term holders have sold more than one million bitcoin since late June — one of the largest liquidation waves in years. Analysts say many early adopters are rotating profits into cash and gold—a classic end-of-cycle move in crypto rallies.
“The marginal buyer has stepped back,” said Markus Thielen, CEO of Singapore-based 10X Research. “Capital that chased higher prices has been flushed out, and those remaining aren’t bidding with conviction.”
Thielen, who predicted Bitcoin would drop to $100,000 last month, now expects the market could correct further before forming a base. “We could see additional liquidation down to the $70,000 range if momentum doesn’t stabilize soon,” he said.
Leveraged Bets Unwind as Market Liquidity Thins
The correction grew after a cascade of leveraged liquidations on October 10 triggered more than $3 billion in forced sales across major exchanges. That event broke key technical support levels around $117,000 and $112,000, ushering in a new wave of algorithmic selling.
Crypto hedge funds and retail traders alike have since been forced to cut exposure, especially as volatility in other assets — including gold and equities — rose sharply this week. Analysts at several trading desks noted that ETF-linked funds may also be trimming exposure as Bitcoin prices fall, amplifying short-term downside pressure.
Macro Headwinds Weigh on Sentiment
Bitcoin’s retreat also coincides with a rebound in the U.S. dollar index, which climbed to a one-month high after signs that the Federal Reserve may delay rate cuts into next year. A stronger dollar tends to pressure risk assets, including cryptocurrencies, by tightening global liquidity.
“The dollar finding its footing again is bad news for crypto,” said Sean Farrell, head of digital assets at Fundstrat. “Liquidity has already been squeezed by the government shutdown, and risk appetite is fading.”
However, some strategists see potential catalysts ahead. The eventual reopening of the government could inject liquidity back into financial markets, and a possible Fed rate cut in December could provide a tailwind for digital assets.
Institutional Interest and Gold Correlation Offer Hope
Despite the dip, Wall Street banks remain cautiously optimistic about Bitcoin’s medium-term outlook. JPMorgan analysts said in a Wednesday note that the recent deleveraging cycle is “largely behind us.” The bank added that rising volatility in gold — traditionally viewed as a safe-haven competitor — could make Bitcoin relatively more attractive over the next 6–12 months.
“The structural drivers for Bitcoin remain in place,” wrote JPMorgan strategist Nikolaos Panigirtzoglou, who sees potential upside toward $170,000 once markets stabilize.
Looking Ahead
Traders are watching the $93,000 level as critical near-term support. If Bitcoin fails to hold that threshold, technical charts suggest limited resistance down to roughly $70,000. But long-term bulls say corrections are a normal part of every crypto cycle — and could set the stage for the next leg higher. With macro conditions in flux and investor sentiment fragile, the coming weeks may test whether this pullback is merely a shakeout — or the start of a deeper shift in the digital asset narrative.
