The myth of Bitcoin as a crisis-proof safe haven has cracked again. After a week of unrelenting losses, the world’s largest cryptocurrency has tumbled to $103,550, wiping out its early October rally and dragging the entire digital asset market down with it.
More than $600 billion in value has vanished since last Friday, according to CoinGecko, marking one of the steepest seven-day declines since 2022. Ether, long considered the market’s bellwether for innovation, has fared no better – now trading below $3,700 after plunging roughly 25% from its summer highs.
But Bitcoin’s fall isn’t just about price – it’s about perception. For years, advocates have branded it as “digital gold,” an asset immune to economic chaos. Yet as global tension flares between the United States and China, investors are fleeing not toward crypto but back into traditional havens like gold and silver, both of which are hitting new records.
The flashpoint came after President Donald Trump reignited the trade war by threatening 100% tariffs on Chinese imports, triggering panic across risk assets. In the chaos that followed, over-leveraged traders were forced to unwind positions worth $19 billion, the biggest liquidation event in the history of crypto.
The pain spread fast. BNB, the exchange token tied to Binance, collapsed by 11% on Friday before recovering slightly. Analysts believe glitches on Binance during the crash helped fuel the domino effect that accelerated liquidations across the market. The exchange has since pledged nearly $600 million in compensation to affected users – an unprecedented move for a company already under intense scrutiny.
“BNB’s drop fits the broader narrative,” said Yoann Turpin, co-founder of market maker Wintermute. “We’re seeing a repricing, not just of coins, but of confidence.”
Amid the chaos, several of the industry’s biggest names are quietly pivoting toward traditional finance. Kraken, Circle, Ripple, and BitGo are all seeking banking licenses and payment charters – a defensive strategy aimed at building stability as volatility worsens. “It’s about legitimacy,” said Rachael Lucas of BTC Markets. “They’re hedging against crypto’s wild swings by stepping into regulated finance.”
The turbulence in digital assets mirrors a broader unease in global markets. Credit fears are resurfacing after the collapses of First Brands Group and Tricolor Holdings, while fraud-linked losses at Zions Bancorp and Western Alliance erased more than $100 billion from U.S. bank valuations in a single day.
The anxiety is clearly spilling into crypto derivatives. Traders have withdrawn nearly $600 million from U.S.-listed Bitcoin and Ether ETFs, and data from Deribit shows the put-to-call ratio rising to 1.33, a sign investors are scrambling for downside protection. “Derivatives are where the fear concentrates,” explained Timothy Misir of BRN Analytics. “When traders buy protection, volatility spikes – and the swings become violent.”
Despite the chaos, optimists are holding onto one key point: crypto corrections often pave the way for new growth phases. But for now, Bitcoin’s promise as an unshakable store of value is under serious strain.
“Bitcoin is behaving like a stress indicator, not a refuge,” said Matthew Hougan, chief investment officer at Bitwise. “It’s the market’s canary – and right now, it’s screaming that risk sentiment everywhere is breaking down.”
Source: Bloomberg
