The Bitcoin pricewhich had been steadily rising to new all-time highs, suddenly plummeted on October 10, dragging the Ethereum price and the rest of the market with it. According to the latter According to Binance Research’s monthly market insights, the crash was not due to weak crypto fundamentals or a loss of investor interest, but an abrupt outflow of excessively risky positions due to geopolitical shocks and macroeconomic uncertainty.
Why Bitcoin and Ethereum Prices Collapsed
Binance Research reports that the October 10 crash occurred when traders sold more than $19 billion in risky positions, marking one of the most significant single-day selloffs in recent crypto history. The decline started shortly after US President Trump announced this new tariffs for Chinaincreasing trade tensions and sending risk markets into a tailspin.
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Bitcoin’s intraday price swings spiked to levels rarely seen, with a Z-score of 3.08, meaning such extreme moves statistically only occur once every 1,000 days. Binance Research notes that the sudden sell-off of risky positions has sent Bitcoin down around 4%, while Ethereum is down 8.6%, marking the market’s first negative run. October since 2018.
The macro environment reinforced the sell-off. A US government shutdown and a rate cut by the Federal Reserve in early October, when the Fed cut rates by 25 basis points but announced a possible pause on further cuts, had already investor confidence shaken.
With the economic data flow disrupted and interest rate policy uncertain, traders sought safety and closed risky positions. Binance notes that total crypto market capitalization fell 6.1%, indicating a coordinated development withdrawal from high-risk exposure.
Will history repeat itself?
Despite the sharp declinethe market recovered quickly. According to Binance Research, total borrowed and risked positions, which briefly fell below 5%, recovered to 5.77% on October 31. This marks a 10% recovery and suggests traders remain confident in taking risks.
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Bitcoin’s market share rose to 59.4%, indicating that investors have turned to safer options during the market turbulence. Meanwhile, Ethereum continued attract institutional buyerswith government bonds reaching 5% of total ETH supply, demonstrating continued confidence in its ability to generate returns.
Binance’s BVoL index, which follows expected price fluctuations in crypto options peaked at 52, well below the yearly high of 88 in March, indicating that investors were not expecting a prolonged crash in Bitcoin and Ethereum prices.
The analysis highlights that the October 10 crash acted as a reset of risky positions and not a reversal of the price trend. The recovery of Bitcoin and Ethereum prices underlines the resilience of the market; However, the return of risky positions means that there could be another sharp correction if new macroeconomic shocks occur, causing prices to fall vulnerable to sudden fluctuations.
Featured image of Dall.E, chart from TradingView.com