Why Did BTC, ETH, XRP & ADA Drop October & Can They Recover Before Halloween?

The cryptocurrency market is going through significant pullback this October. After rallying early in the month, the total crypto market cap slid roughly 14% from its peak, according to from TradingView, reflecting a sharp reversal in sentiment.

Driving this decline was a steep Bitcoin price drop, which retraced 17.7% from its recent all-time high near $126,272, plunging to briefly touch $103,530 before stabilizing near as of this report. This heralded a broader crypto market crash affecting almost all the top cryptocurrencies.

The market crash caught many traders off guard, countering the typical that most had predicted by September month end.

This abrupt shattering of the ‘Uptober’ expectation provoked an immediate scramble for explanation, driving urgent searches for underlying causes that instantly elevated search terms as ‘Bitcoin news’ and ‘Ethereum news’ within the digital public square.

Beyond Bitcoin’s plunge, similar sharp drops occurred in Ethereum (ETH), XRP, and Cardano (ADA), confirming the broad-based nature of the sell-off.

Analysis suggests a primary catalyst originated from growing stress signals in the US regional banking sector.

The timing of the flash crash on October 10 overlapped with that Zions Bancorp lost $50 billion to bad loans and Western Alliance pursuing litigation over alleged borrower fraud, alongside First Brands and Triocolor Holdings .

While these firms are not directly linked to crypto, the banking issues triggered broader contagion fears across Wall Street. Market volatility surged ( reportedly hit 28.99), its highest level since April’s trade tensions.

Comments from top Wall Street personalities, including JP Morgan CEO Jamie Dimon warning that regional banks may face amplified market anxiety, prompting a wider flight from risk assets, including crypto.

Layered onto the macro fears was a significant shift in institutional positioning, evidenced by massive outflows from US-listed Spot Bitcoin and Ethereum ETFs. A reported record daily outflow of $593 million occurred , signaling panic or strategic de-risking across the institutional investor base.

Meanwhile, amid the ongoing confusion across the digital assets market came the news of a US government shutdown, which compounded issues for investors, driving them towards more stable options.

The backdrop to these market shocks has been the ongoing U.S. government shutdown. While not a direct trigger for the crash, it likely contributed to the heightened uncertainty and cautious investor sentiment. Delays in key economic data releases (like the ) have made market participants quicker to de-risk when negative news hits.

The initial price drops driven by bank fears and ETF outflows noted above were amplified by a cascade of forced liquidations in the crypto derivatives market. Along with Bitcoin and Ethereum, when major altcoins XRP and ADA also breached key technical levels, automated stop-loss orders got triggered causing highly leveraged long positions being liquidated due to insufficient margin.

Reports indicate over $19 billion in leveraged positions were . This leverage flush demonstrates how excessive speculation built into the market structure can turn a pullback into a severe crash, adding immense selling pressure independent of the initial fundamental triggers. The sheer scale of these liquidations likely deepened the price decline for Bitcoin, Ethereum, XRP, and Cardano and damaged near-term market sentiment.

Notably, traders who lost significant amounts during the last crash may remain out of the market for a while, until they can regroup and relaunch themselves. Others may be waiting for a boost from institutional investors who have the capacity to introduce massive inflows that could move the market into bullish territory. Then, retail traders may re-enter the market manually or by triggering already-placed limit orders.

The latest crash saw 97% of the top 100 cryptocurrencies recording significant losses. However, many crypto users remain optimistic over an imminent rebound, especially with the expectation that the market would receive new energy when the US government resumes full activities after the current shutdown.