3 min read
Cryptocurrency markets are reeling once again as Bitcoin tumbled below $112,000, triggering fresh volatility across the board. The broader altcoin sector has been hit even harder, with losses exceeding those of Bitcoin and investor sentiment swinging from euphoria to caution in record time.
What Sparked the Selloff?
The shock came on October 10 when former U.S. President Donald Trump announced 100% tariffs on Chinese tech exports. The move rattled global markets and triggered a chain reaction of sell pressure in risk assets. The news cascaded through crypto markets where leveraged positions were particularly vulnerable, resulting in lightning-fast liquidations and runaway volatility.
In fact, the crypto market witnessed the largest liquidation event in history with more than $19 billion in leveraged positions wiped out in a single day. Many traders had built up long exposure during recent rallies and were caught off guard by the speed and severity of the reversal.
ETF flows and liquidity dynamics further complicated the picture. As Bitcoin dipped, several institutional funds and market makers withdrew bids, which intensified the selloff.
Altcoins: From Outperformance to Overexposure
While Bitcoin led the headlines, altcoins bore the brunt of the crash. Ethereum, XRP, Solana, and many mid-cap coins fell sharply. ETH plunged as much as 18% in intraday moves. XRP dropped more than 30% in extreme swings before staging a partial recovery. SOL and other smart chain tokens saw double-digit declines as thin liquidity collided with mass exits.
Memecoins and AI tokens plunged between 30% and 35%, underlining how high-beta plays suffered the most damage. A few smaller altcoins managed to resist the worst of the heat thanks to strong technical bottoms or niche investor support. But for most tokens, major supports and liquidity thresholds failed to hold.
A Partial Rebound but Fragile
By October 13, markets attempted a soft rebound. Bitcoin recovered to levels above $114,000, while ETH and select altcoins gained between 7% and 10%. The rebound was aided by Trump stepping back from immediate tariff escalation, calming some market nerves. However, this wave was again short-lived, as BTC tanked to $111K within hours of stability.
Analysts cautioned that the bounce is fragile, and they were right. For Bitcoin to regain confidence, it must break past resistance near $123,000 and hold support between $107,000 and $115,000.
Technicals and Market Structure
Chart watchers are pointing to classic patterns forming: a triple top resistance near recent highs, bearish RSI divergence, and declining momentum on volume charts. These signals suggest upside may be capped unless strong buying conviction returns.
Academic models confirm that crypto markets carry large variance risk premiums. Downside moves are often punished harder than upside moves, making price gaps and abrupt swings more common in high-volatility environments.
Previous studies also highlight time-varying volatility, showing how calm periods and stormy regimes alternate. The current situation fits this pattern.
