$1 Trillion Gone in Weeks in Bitcoin Crash as Self-Fulfilling Prophecy Takes Centrestage

The total cryptocurrency market cap has erased $1.2 trillion (£913.8 billion) of investor wealth in just over five weeks. Bitcoin prices have plummeted over 25% to below $90,000 (£68,536) this week, down from record highs of $126,000 (£95,951) in early October.

The last time Bitcoin traded below the $90,000 mark was seven months ago, erasing much of this year's gains and sparking widespread concern across the crypto industry.

The sharp decline has prompted questions about whether this is merely a temporary market correction or the start of a longer-term bear cycle that could last several years.

A Self-Fulfilling Prophecy

The sell-off began when $19 billion (£14.4 billion) in leveraged positions were liquidated in October. This was partly driven by profit-taking by long-term investors.

However, the timing also aligns with a historical pattern: Bitcoin tends to peak between 400 and 600 days after its halving event, which occurred in April 2024.

According to Bernstein analysts, this has created a self-fulfilling prophecy, triggering a market sell-off in Q4 2025. Nonetheless, evidence suggests this might be a short-term consolidation into a 'new local bottom', rather than the 60-70% drawdowns seen in previous cycles.

The firm noted that increased ETF adoption by institutional investors indicates 'higher quality and consistent ownership' of Bitcoin. Analysts also pointed out that supportive political signals—such as the Trump administration's favourable stance on cryptocurrencies and the Clarity Act legislation in Congress—are positive drivers for the digital asset ecosystem.

Low Prices as a Lucrative Entry Point

Bernstein believes this crypto bloodbath does not necessarily mark a cycle peak but reflects a structural trend of rising institutional participation, with regular corrections along the way.

'We are observing if Bitcoin can bottom close to ~$80K range seen immediately post the Trump election. We believe the current market weakness may provide an attractive entry for new investors,' analysts wrote.

Michael Saylor, the largest corporate holder of Bitcoin, echoed this view. On Monday, MicroStrategy revealed it had purchased 8,178 BTC tokens for $835 million (£635.8 million).

Diverging Views from Experts

10X Research explained that new buyer appetite weakened in early October, while the Federal Reserve's recent hawkish tone 'has tilted the macro balance, leaving the market increasingly fragile.'

'This is why the four-year cycle warrants serious consideration,' 10X Research wrote in a note. '[This cycle] aligns with a broad set of independent indicators and conditions pointing to the same conclusion: this is a moment for maximum caution.'

The firm warned that if Bitcoin falls below $93,000 (£70,821), it could trigger an accelerated 'liquidation cascade'.

Meanwhile, Gerry O'Shea of Hashdex Asset Management noted: 'Bitcoin has struggled due to selling pressure from long-term holders taking profits, combined with uncertainty around Fed policy, the liquidity environment, and other macro conditions.'

Presto Research head Peter Chung added that pressure on Bitcoin prices is aligned with other risk assets like AI stocks. He pointed out that its downside could be amplified by factors such as 'thinner' order books, which could impact many market makers in the space.

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