Crypto Crash Wipes $1.1B as Bitcoin Rejects $116K

The cryptocurrency market experienced a dramatic reversal this week as Bitcoin’s repeated rejection at the $116,000 resistance level triggered a cascade of liquidations across digital assets. Despite what appeared to be favorable conditions—including a Federal Reserve rate cut and productive trade discussions between Presidents Donald Trump and Xi Jinping—the market failed to capitalize on these positive developments. Instead of the anticipated rally, Bitcoin slumped from over $112,000 to $107,500, marking a new weekly low and continuing the downward trajectory that began after the asset peaked on October 6.

This rejection at critical resistance levels represents a significant psychological blow to market participants who had been banking on what many termed ‘Uptober’—a historical pattern of October gains in cryptocurrency markets. The failure to maintain momentum following the early October surge to all-time highs has left investors questioning the sustainability of the current market cycle. Even excluding the flash crash that occurred four days after the peak, Bitcoin remains nearly $20,000 down in just over three weeks, indicating a sustained bearish pressure that has defied traditional market logic.

Bitcoin’s nosedive dragged the entire cryptocurrency complex lower, with major altcoins suffering significant losses. Ethereum (ETH) dumped by 5% to under $3,800, while XRP dropped by over 6% to $2.45. The pain was even more pronounced among smaller-cap assets, with HASH collapsing 22%, ASTER falling 13%, KAS declining 11%, PI dropping 10.5%, and WLFI losing 10%. These dramatic moves highlight the heightened volatility that continues to characterize the cryptocurrency space, particularly during periods of market stress.

The correction proved particularly devastating for leveraged traders, with more than 210,000 market participants seeing their positions liquidated within 24 hours. Data from CoinGlass reveals the total value of liquidated positions skyrocketed to more than $1.1 billion, with long positions bearing the overwhelming brunt of the damage. Of the total liquidations, $974 million came from long positions versus only approximately $126 million from shorts, indicating that the majority of traders had positioned themselves for continued upward momentum despite mounting technical warning signs.

The market’s negative reaction to what should have been bullish catalysts has left analysts and investors searching for explanations. The Federal Reserve’s rate cut typically signals easier monetary conditions, which historically benefit risk-on assets like cryptocurrencies. Similarly, the meeting between President Donald Trump and China’s Xi Jinping resulted in lower tariffs, reducing trade tensions that have previously weighed on global markets. Yet the cryptocurrency market failed to respond positively to these developments, suggesting either that these factors were already priced in or that other, more powerful forces are driving current price action.

This disconnect between fundamental catalysts and price action underscores the unique dynamics governing cryptocurrency markets. While traditional assets might respond predictably to macroeconomic developments, digital assets often move according to their own internal logic, driven by technical levels, leverage cycles, and sentiment shifts that can override even the most positive external developments. The current situation highlights the ongoing maturation process of cryptocurrency markets and serves as a stark reminder that historical correlations don’t always hold in emerging asset classes.