Bitcoin got stuck after slumping 30% from its peak. Here's why.

Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Bitcoin got stuck after slumping 30% from its peak. Here's why. The October flash crash exposed how fragile bitcoin’s rally had become. It also illustrated a fundamental change in how BTC is perceived. By Olivier Acuna | Edited by Sheldon Reback , Aoyon Ashraf Dec 31, 2025, 12:00 p.m. Traditional finance's adoption of bitcoin helps explain its lackluster 2025 performance. (Lo Lo/Unsplash/Modified by CoinDesk) What to know : Bitcoin's 2025 bull run was disrupted by a flash crash, revealing the volatility and unpredictability of digital asset trading. Institutional acceptance has shifted bitcoin from a fringe asset to part of the institutional macro complex, affecting its price dynamics. Despite optimistic forecasts, bitcoin ended the year significantly below expectations, influenced by macroeconomic factors and cautious capital. Bitcoin’s BTC $ 88,895.07 bull run in 2025 was expected to be historic, with some industry experts suggesting the largest cryptocurrency would reach highs of $180,000-$200,000 by year-end. Historic it was. Just not the way anyone thought. STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy . It's true that bitcoin punched to an all-time high earlier than most models projected, rising to over $126,200 on Oct. 6 . But then, four days later, came a flash crash that sent the market reeling, exposing just how fragile and unpredictable trading digital assets can be. Since then, bitcoin's fallen 30% from the October record, and more than 50% below most 2025 forecasts. Far from shooting up, it dropped 6% this year, and spent most of the past two months stuck between $83,000 and $96,000, according to TradingView prices. October's crash caught traders off guard and wiped out months of leveraged bullishness in minutes. But it wasn't a breakdown, according to Mati Greenspan, the founder of Quantum Economics, it was a rebalancing and a sign of the cryptocurrency's growing acceptance by institutions. Bitcoin was re-priced as a risk asset, not a revolution. “The October 10 flash crash wasn’t a failure of bitcoin," Greenspan said in an interview. "It was a liquidity event, triggered by macro stress, trade-war fears, and crowded positioning, that exposed how forward-loaded the cycle had become.” The sudden change in behavior made forecasting nearly impossible, and made some of the space’s most recognizable analysts eat their words. Read more: In 2025, bitcoin showed how spectacularly wrong price forecasts can be As the year started, experts such Matt Hougan, Bitwise Asset Management's chief investment officer, Mike Novogratz, Galaxy Digital’s CEO, Geoffrey Kendrick, Standard Chartered’s global head of digital assets research and others shared optimistic forecasts, but as it comes to a close and the dust settles, the reality is entirely different. 'Cautious capital' What happened? Simply put, bitcoin's ideological roots were overtaken by its growing acceptance as an institutional asset. This shift changed how bitcoin was traded and evaluated by sophisticated investors from traditional markets. ‘What went wrong in 2025 is that bitcoin quietly crossed a threshold. It stopped being a fringe, retail-driven asset and became part of the institutional macro complex,” Quantum Economics' Greenspan told CoinDesk. “Once Wall Street arrived, bitcoin began trading less on ideology and more on liquidity, positioning, and policy.” With Wall Street's involvement, bitcoin became more closely tied to macroeconomic events, which impact all asset classes. The cryptocurrency may still be pitched as a hedge against the Federal Reserve, but it’s now more sensitive than ever to Fed policy. “Markets came into 2025 expecting faster, deeper Fed easing — and that simply hasn’t materialized,” said Jason Fernandes, co-founder at AdLunam. “BTC, like other risk assets, is paying the price for cautious capital.” In addition, October’s liquidation cascade left both retail and institutional investors bruised. “Derivatives-driven liquidations made for a choppy, unpredictable market where one batch triggered the next," Fernandes said." It’s no surprise ETF inflows dried up.” From January through October, U.S. spot bitcoin ETFs attracted about $9.2 billion in net inflows, or around $230 million a week . But then the momentum reversed sharply. From October through December, the figures turned negative, with over $1.3 billion in net outflows , including a $650 million withdrawal in just four days in late December . Quantum Economics' Greenspan pointed to a fundamental Catch-22: “Bitcoin is often framed as a hedge against the Federal Reserve, yet in practice it still depends on Fed-driven liquidity.’” Since 2022, the Fed has been steadily withdrawing liquidity from the system, and this liquidity ultimately flows into risk assets, including bitcoin. "When that tide goes out, the upside becomes fragile,” he added. Skewed expectations This changed reality creates a conundrum for bitcoin and crypto as a whole. Mass adoption and price rally need Wall Street's capital, but that capital is a double-edged sword. “Most people assumed institutional adoption would mean bitcoin to a million [dollars] faster than you can blink,” said Kevin Murcko, CEO of crypto exchange CoinMetro. “But now that it’s institutionalized, it’s being treated like any other Wall Street asset. “That means it responds to fundamentals, not just belief,” he said. “We’re seeing prices react to everything from the Bank of Japan (BOJ) ending cheap capital to political uncertainty around the Fed itself. And institutions don’t like uncertainty.” Then there are weekends. “Bitcoin trades 24/7, but capital flows don’t; most big flows are Mon-Fri. So when the weekend hits, and leverage is high, you get cascading liquidations.” Silver lining However, this doesn't mean it's all doom and gloom. In fact, it's a positive shift toward higher prices, just slower than expected, according to the experts. Bitwise's Hougan said he believes the general trend remains upward: “It’ll be messy. But the macro direction is clear. “The market is driven by the collision of powerful, persistent positive forces and periodic, violent negative ones.” He said, remaining optimistic despite the recent washouts. “Institutional adoption, regulatory clarity, macro concerns around fiat debasement, and real-world use cases like stablecoins — those are slow-moving, positive forces. They take a decade to play out.” Bitcoin, traditionally seen as following a four-year cycle tied to the regular 50% cuts in the creation of new tokens paid out to miners, is likely to create a new dynamic in 2026, he said. “The old cycle drivers—halvings, interest rates, and leverage—are significantly weaker,” he told CoinDesk earlier this month. Future growth will be driven by more mature, structural forces, such as institutional flows, regulatory clarity, and global asset diversification. “That’s why we believe bitcoin could hit new all-time highs in 2026 — even outside the traditional halving cycle.” Quantum Economics' Greenspan perhaps summed up what's happening with bitcoin and where it's going. “This wasn’t ‘peak bitcoin,’” he said. “It was the moment bitcoin officially started playing in Wall Street’s pond.” Bitcoin News market analysis More For You State of the Blockchain 2025 By CoinDesk Research Dec 19, 2025 Commissioned by Input Output Group L1 tokens broadly underperformed in 2025 despite a backdrop of regulatory and institutional wins. Explore the key trends defining ten major blockchains below. What to know : 2025 was defined by a stark divergence: structural progress collided with stagnant price action. Institutional milestones were reached and TVL increased across most major ecosystems, yet the majority of large-cap Layer-1 tokens finished the year with negative or flat returns. This report analyzes the structural decoupling between network usage and token performance. We examine 10 major blockchain ecosystems, exploring protocol versus application revenues, key ecosystem narratives, mechanics driving institutional adoption, and the trends to watch as we head into 2026. View Full Report More For You Bitwise files for 11 'strategy' ETFs, tracking tokens including AAVE, ZEC, TAO By Olivier Acuna | Edited by Sheldon Reback 40 minutes ago The exchange-traded funds will invest both directly and indirectly in the tokens. What to know : Bitwise filed with the SEC to introduce 11 crypto strategy ETFs, covering tokens including AAVE, UNI and ZEC. The ETFs will invest up to 60% in the underlying token, with the rest in exchange-traded products and derivatives. The filing coincides with Grayscale's move to convert its bittensor trust into an exchange-traded product as decentralized AI gains traction. Read full story Latest Crypto News Bitwise files for 11 'strategy' ETFs, tracking tokens including AAVE, ZEC, TAO 40 minutes ago XRP and solana volatility in 2025 was twice as bumpy as bitcoin's 46 minutes ago Winklevoss-backed Cypherpunk buys $28 million of zcash, now owns 1.7% of supply 2 hours ago South Korean retail keeps buying ether hoarder BitMine despite 80% drop: Report 5 hours ago Bitcoin's market got calmer in 2025 thanks to yield-hungry institutional investors 5 hours ago Bullish calls of XRP to jump 300% in 2026 do the rounds again, implying $8 target 6 hours ago Top Stories Bitcoin's market got calmer in 2025 thanks to yield-hungry institutional investors 5 hours ago XRP and solana volatility in 2025 was twice as bumpy as bitcoin's 46 minutes ago South Korean retail keeps buying ether hoarder BitMine despite 80% drop: Report 5 hours ago Bullish calls of XRP to jump 300% in 2026 do the rounds again, implying $8 target 6 hours ago Bitcoin, ether drop more than 22% in Q4 as December ‘Santa rally’ fizzles 6 hours ago Bitwise files for 11 'strategy' ETFs, tracking tokens including AAVE, ZEC, TAO 40 minutes ago In this article BTC BTC $ 88,895.07 ◢ 1.24 %