Renewed US-China trade tensions sparked a massive sell-off in the crypto market last month, with Bitcoin plunging from UScopy22,000 to copy07,000 at one point, but analysts are referring to it as a “deep but temporary” reset, adding the bull cycle is not over yet.
Global crypto markets were rocked in October as renewed US-China trade tensions caused a sell-off that wiped out more than copy9 billion in leveraged positions within hours. Along with a drop in the Bitcoin price, several altcoins also lost more than half their value overnight.
The turmoil began after China imposed new export controls on rare earth minerals, prompting US President Donald Trump to retaliate with plans for a 100% tariff on Chinese goods. Although equity markets treated the move as a short-term correction, the highly leveraged crypto market reacted violently, triggering one of the largest liquidation waves in its history.
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Thanalop Preedamanoch, fund manager at Merkle Capital, said the sell-off, though sharp, should be viewed as “a deep but temporary reset, rather than a systemic collapse”.
The shock was largely confined to overleveraged traders, with no signs of contagion across major exchanges or institutions, said Mr Thanalop.
“The pain was deep but isolated,” he said, adding that it served as a necessary shakeout after months of speculative excess.
The cascade began when traders betting on “Uptober”, a historically bullish month for crypto, were blindsided by the geopolitical shock. Forced liquidations rippled across major exchanges, while some platforms suffered technical glitches that prevented stop-loss orders from executing, amplifying the market rout.
Although the sell-off erased much of the momentum expected to fuel a fourth-quarter “altseason”, analysts believe the fallout is largely contained.
Unlike the Luna, 3AC and FTX collapses in 2022, this event was primarily driven by leveraged traders rather than structural failures in the crypto ecosystem, said Mr Thanalop.
Despite the chaos, analysts remain cautiously optimistic. The damage appears to be contained and several upcoming catalysts could stabilise sentiment heading into the latter end of the fourth quarter. For example, at the Apec 2025 Summit Trump and Chinese President Xi Jinping seemed to ease trade tensions and lift investor confidence.
Another factor is the US Federal Reserve’s policy shift. Possible signs of monetary easing and an end to quantitative tightening could restore liquidity. Meanwhile, anticipated approval of new digital asset exchange-traded funds beyond Bitcoin and Ethereum may attract fresh institutional inflows.
Finally, continued corporate accumulation from Digital Asset Treasury firms adding Bitcoin and Ethereum to their balance sheets signalled long-term confidence.
While the market remains fragile, many analysts view this episode as a temporary reset rather than the end of the cycle.
If liquidity stabilises and macro conditions improve, a late-quarter rebound could mark the start of a healthier, more sustainable uptrend for digital assets, he said.
“Crypto markets have faced shocks before,” said Mr Thanalop. “Each time, the ecosystem emerges leaner, smarter, and more resilient. This could be another one of those turning points.”
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