The crypto market crash in October 2025 was primarily triggered by U.S. President Donald Trump's announcement of a 100% additional tariff on China, effective November 1, 2025, in response to China's export controls on critical materials and technology. This tariff escalation induced a global market panic, causing a flash crash in crypto prices, with Bitcoin falling below $110,000 and significant drops in major altcoins like Ethereum, XRP, and Solana. The immediate market reaction saw over $12 billion in liquidations, especially forced liquidations of highly leveraged long positions on crypto exchanges, exacerbated by circular loan liquidations and deleveraging by market makers. The leverage and liquidity fragility in the crypto ecosystem magnified the effects of the macroeconomic shock from trade tensions, leading to deeper declines compared to traditional equities. About 1.5 million traders were liquidated, with altcoins losing 70–80% of their value on average. As for recovery, the outlook suggests a gradual bottoming process. Market makers step back to manage risk and slowly refill liquidity by arbitrage between spot and futures markets, preventing an immediate sharp rebound. Historical data indicates that large sudden drops in October are rare, and Bitcoin, for example, may recover up to around 20% in the subsequent week if past trends repeat. Yet, recovery depends heavily on the continuation or resolution of the U.S.-China trade tensions and the broader macroeconomic environment including Federal Reserve policies and liquidity conditions. Hence, while a recovery is likely, it may be slow and subject to volatility based on external factors. In summary:
- Cause: Trump's unexpected 100% tariff on China triggered panic and massive leveraged liquidations.
- Mechanisms: Circular loan liquidations and deleveraging cascades worsened the crash.
- Impact: $12 billion+ liquidations, altcoins down 70-80%, Bitcoin below $105,000 briefly.
- Recovery: Expected to be gradual with a slow bottoming process, potential for a 20% rebound if historical October patterns hold.
- Risks: Depends on evolving geopolitical and macroeconomic factors.
This explanation is based on multiple detailed reports from October 2025 covering the crash and recovery outlook.
