On the evening of October 10, 2025, Trump once again wielded the tariff weapon, causing $Bitcoin (BTC.CC)$ a significant decline. From the evening of October 10 to the morning of October 10, BTC fell from a high of 122,525 to 101,200, with the maximum drop reaching 17%.
Trump's wielding of the tariff weapon was merely the trigger; market vulnerability was the root cause.
The immediate trigger for this round of declines was Trump's threat to impose additional tariffs, which sparked risk aversion across global financial markets. However, the underlying cause was the inherent fragility of the market, as excessive speculation had already built up prior to the crash.
The cryptocurrency bull market that began in June 2025 accumulated substantial risks, with some investors borrowing stablecoins by pledging USDe and repeating the process, leveraging their initial capital nearly fourfold. However, even a minor price decline could trigger large-scale liquidations.
The market maker mechanism further exacerbated this round of declines. Under the unified account model, the sharp drop in collateral prices passively increased leverage, triggering automatic liquidation mechanisms. Meanwhile, the withdrawal of liquidity by market makers intensified flash crashes in altcoins.
As a result, macroeconomic shocks spread through the leverage chain between DeFi and CeFi, ultimately leading to systemic collapse and highlighting the hidden risks of high-yield strategies.
How long does it take for BTC to recover from a crash and break its previous high? — A review of the three historical crashes.
Such steep plunges in the cryptocurrency market are not unprecedented. Looking back over the past five years, there have been at least three notable crashes. While the causes behind each crash share similarities, they also differ in specific aspects.
1. The 2020 '312' Liquidity Crisis – From the Plunge to a New High, BTC Took 278 Days
The '312' liquidity crisis refers to the sharp plunge of Bitcoin from around USD 8,000 to approximately USD 3,783 within two days on March 12 and 13, 2020, with a maximum decline exceeding 50%. The entire cryptocurrency market lost hundreds of billions of dollars in value, triggering global panic and being labeled as 'Black Thursday' or 'Bloody Day'.
The macroeconomic backdrop of this liquidity crisis was global panic over the COVID-19 pandemic and economic recession. The outbreak of the pandemic at the beginning of 2020 caused a global economic standstill. Investor confidence collapsed, leading to a liquidity crisis where all risk assets, including equities and commodities, were sold off. The three major U.S. stock indices plummeted in early March, with futures, bonds, and crude oil prices crashing simultaneously.
Although Bitcoin is regarded as 'digital gold,' it failed to act as a safe haven during extreme panic, instead falling by half in tandem with U.S. stocks and crude oil. Investors, needing to replenish margin requirements, dumped highly liquid assets, including Bitcoin and gold, en masse.
Beyond macro risks, the cryptocurrency market also faced issues of insufficient market depth. The crypto market had high leverage, and even small price declines triggered cascading liquidations of long positions. Starting at 6:00 PM on March 12, 2020, large sell orders crashed the market, with spot price drops transmitting to futures, creating a cycle of forced liquidations.
DeFi protocols such as MakerDAO also faced bad debt crises. Insufficient market depth led to outages or delays on multiple trading platforms, preventing timely order processing.
Following the 312 crash, Bitcoin rebounded to above USD 6,000 within two months and took 278 days to break its previous high, eventually soaring to a new peak of USD 69,000 one year later.
2. The 2021 '519' Mining Retreat Wave – From the Plunge to a New High, BTC Took 154 Days
This round of cryptocurrency market decline was primarily driven by regulatory crackdowns and policy tightening. On May 18, the three major Chinese associations (Internet Finance Association, Banking Association, and Payment and Clearing Association) jointly issued a statement sternly warning about the risks of speculative virtual currency trading and prohibited financial institutions from providing related services.
This directly undermined the confidence of Chinese miners and traders, leading to a wave of mining rig sell-offs. Concurrently, news emerged that the Biden administration in the United States planned to impose taxes on holdings of cryptocurrencies exceeding USD 10,000. Both Yellen and Powell publicly labeled cryptocurrencies as 'speculative products,' subjecting the cryptocurrency market to scrutiny from regulators and policymakers.
Elon Musk, who had previously driven up the price of Dogecoin, also began to shift his tone. On May 12, 2021, Musk announced that Tesla would suspend accepting Bitcoin payments. On May 17, he hinted that Tesla might have sold part of its Bitcoin holdings, although he later clarified that it did not happen. However, as a key figure in driving up Dogecoin, Musk's remarks triggered market fears and exacerbated fluctuations in investor sentiment.
At that time, the cryptocurrency market also faced the issue of excessive leverage, with DeFi protocols experiencing large-scale bad debts, leading to panic selling in both spot and futures markets.
From the low of $28,800, Bitcoin rebounded to its previous high within 154 days and reached a new all-time high of $71,000 within the following month. The bull market continued into early 2022.
3. The “FTX Collapse” of 2022 – It took BTC 486 days to recover from the crash and reach a new all-time high.
The 'FTX collapse' refers to the bankruptcy of FTX, the world’s third-largest cryptocurrency exchange, which occurred in November 2022 (mainly between November 2-12). This crisis was triggered by a scandal involving the misappropriation of funds led by FTX founder Sam Bankman-Fried (SBF), resulting in an $8 billion funding gap exposed between FTX and its affiliated trading firm Alameda Research, with over $8 billion of customer funds being misappropriated.
The event caused Bitcoin’s price to plummet to a low of $13,600, triggering an industry-wide 'trust crisis' and a regulatory storm. It was considered a turning point in the 2022 crypto 'bear market.'
On November 2, 2022, CoinDesk reported that Alameda held a large amount of FTT, revealing the highly interconnected transactions and financial vulnerabilities between FTX and Alameda. Following the exposure of fund misappropriation, the price of FTT collapsed by over 70%, directly causing a liquidity crunch. A client bank run in the tens of billions of dollars occurred within days, creating a vicious cycle.
On November 6, 2022, Binance CEO CZ announced the liquidation of Binance’s FTT holdings (worth over $500 million) for risk management reasons. On November 8, Binance briefly agreed to acquire FTX but withdrew the next day due to 'evidence of fund misappropriation.' The liquidation and withdrawal by Binance further intensified market panic, causing FTX’s liquidity to evaporate instantly and accelerating the bankruptcy process.
Against the backdrop of the 2022 bear market, the cryptocurrency market itself also faced liquidity tightening issues. The collapse of Terra-Luna in May and Celsius’s bankruptcy in the summer had already tightened market liquidity. External pressures compounded internal problems, with Bitcoin suffering an annual decline of over 60%. Institutional capital outflows and bankruptcies of other platforms accelerated the onset of a 'crypto winter.'
Bitcoin bottomed out at the end of 2022, rebounded above $40,000 in 2023, and broke its previous all-time high in early 2024, taking 486 days. The FTX collapse exposed regulatory gaps in the industry, prompting global efforts to strengthen crypto compliance. In 2024, the approval of the BTC ETF allowed BTC to reach new highs.
How long will it take for BTC to rebound from this crash and break its previous high?
BTC has now returned above $110,000. Whether the cyclical pattern of stabilizing after a sharp decline and reaching new highs can repeat itself remains to be seen. How long will it take for BTC to surpass its previous all-time high of $126,200?
Binance founder CZ stated that Bitcoin's current volatility is insignificant compared to the past. According to the four-year cycle rule, the peak is expected to occur between October and December.
The latest report from ARK Invest, led by Cathie Wood, indicates that Bitcoin’s fundamentals remain robust, with network activity and profitability reflecting strong demand. Long-term holders have not shown signs of selling. On the macro front, controlled inflation, weakening employment, and a potential shift in Federal Reserve policy could provide support for Bitcoin. ARK also cautions that 2025 may bring greater volatility, but the long-term outlook remains positive.
Murphy, an on-chain data analyst, pointed out that large Bitcoin whales continue to accumulate at a steady pace, showing a clear trend of buying more as prices drop. Although the decline on October 11 was steep, the psychological impact on major holders was far less severe than during the two macro events in April this year and August last year. The rate of capital outflows was also slower compared to previous instances. With the continuous influx of large capital, the Bitcoin market has matured overall, responding to sudden events without panic or collective sell-offs. This marks the beginning of a major cycle transitioning from bull to bear, but the foundation of the bull market remains intact. The biggest uncertainty in the market currently is Trump, whose unpredictable policies could trigger short-term volatility.
EMC Labs, a crypto research institution, stated that BTC has preliminarily priced in the U.S.-China trade conflict. However, risks originating from the U.S. may not yet be fully released, potentially obstructing capital flows through BTC ETF channels. Nevertheless, excessive pessimism is unwarranted, as the U.S.-China trade war is likely to return to rationality, and its impact should be less significant than in April this year. Whether new highs can be reached in the medium term will largely depend on whether funds can flow back due to developments in the U.S.-China trade conflict and the performance of U.S. stocks, as well as whether long-term holder sell-offs can ease.
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