Why Did Bitcoin Just Crash Below $100K?

The Damage Was Massive

Let's start with the numbers. Over $1.3 billion worth of positions got liquidated in just 24 hours. Bitcoin alone saw $470 million vanish. About 338,355 traders lost money, with $862 million coming from people betting prices would go up.

Bitcoin has dropped about 12% this past week and over 20% since hitting its all-time high of $126,000 in October. That's a serious fall, even for crypto. Ethereum dropped nearly 10% to below $3,300. XRP fell 7.5%, Solana lost 8%, and Dogecoin went down about 7%.

While Bitcoin struggled, the news is not all bad for crypto. There are trending new crypto projects, focused on practical applications, continuing to attract investor attention. These newer platforms, built on improved blockchain technology, seemed somewhat insulated from Bitcoin's volatility. Several analysts noted that market corrections often separate speculative tokens from projects with genuine utility. This crash might actually benefit serious innovators by clearing out the noise and directing attention toward cryptocurrencies solving actual problems rather than riding Bitcoin's coattails.

What Caused This Crash?

Several things went wrong at once. First, the Federal Reserve basically said they won't be cutting interest rates as fast as people hoped. When the Fed talks tough on rates, risky investments like crypto usually get hit hard.

A Chinese startup called DeepSeek claimed they built an AI model that's just as good as American ones but way cheaper. This scared tech investors because it questioned whether U.S. companies really need to spend billions on AI development. Tech stocks crashed, and since Bitcoin often moves with tech stocks these days, crypto went down too.

The U.S. government shutdown didn't help either. It's the longest full closure in history, and it's making investors nervous about everything. Add in worries about liquidity and doubts about future rate cuts, and you've got a recipe for panic.

Why Leverage Made Everything Worse

Here's something most people don't realise: tons of crypto traders borrow money to make bigger bets. It's called leverage, and it's dangerous. When prices go up, these traders make huge profits. But when prices fall, they get forced out of their positions automatically.

Think of it like this: imagine you borrowed money to buy a house, betting prices would rise. If prices fall instead, the bank might force you to sell immediately to pay back the loan. That's basically what happened to thousands of crypto traders this week.

The data shows that once Bitcoin broke below $100,000, there wasn't much buying support until $88,000. It's like removing the safety net. Once the first domino falls, the rest follow fast.

Some experts think big investment funds are still hurting from October's crash, when $20 billion in Bitcoin positions got liquidated. These funds might still be selling, adding more pressure.

Where Bitcoin Goes Next

Nobody knows for sure, but analysts are divided. The pessimistic ones are pretty worried. Julio Moreno from CryptoQuant thinks Bitcoin could fall to $72,000 in the next month or two. That would be another 30% drop. Trader Captain Faibik sees warning patterns on the charts and thinks we might even see $55,000.

But some people are more optimistic. Vladislav Ginzburg from OneSource thinks big investors just took profits above $115,000, and now Bitcoin is finding its real value. He expects big companies to start buying crypto again soon.

The options market shows traders are placing big bets that Bitcoin will stay above $90,000, but they're also protecting themselves in case it falls to $80,000. Basically, even the professionals aren't sure what happens next.

What This Means for New Crypto Projects

If you're thinking about starting a crypto company or investing in one, this crash teaches important lessons. First, crypto sentiment changes incredibly fast. One day, everyone's euphoric, the next day they're panicking.

Second, crypto doesn't exist in isolation anymore. When tech stocks fall, Bitcoin falls. When Bitcoin falls, smaller cryptocurrencies fall even harder. 

Third, borrowed money amplifies everything. Many of those 338,355 traders who got liquidated thought they were smart using leverage. They learned an expensive lesson about risk. You need real utility and enough cash to survive these crashes. Crypto isn’t for the weak of heart, but many see the risk worth the reward.

Finding Opportunities in the Chaos

For people with cash ready and strong nerves, crashes create opportunities. New crypto projects that survive these events often come out stronger. Weak players get eliminated, serious builders remain.

The technology hasn't changed. Blockchain still works. Smart contracts still execute. DeFi protocols still process transactions. What's changed is the crazy speculation and excessive borrowing, and honestly, that needed to happen.

Despite all the fear, some analysts remain positive long term. As one put it, "$100,000 is psychologically important, but this doesn't change Bitcoin's long-term investment case."

Conclusion

Bitcoin crashing below $100,000 reminds everyone that crypto markets are brutal. Between Federal Reserve concerns, Chinese AI competition, government problems, and too much borrowed money, everything aligned to create this storm.

The message is clear: easy money in crypto is trickier these days. Success now requires solving real problems, managing risk, and having enough reserves to survive crashes. Projects that make it through will be the ones with actual value, not just hype.

Whether Bitcoin stabilises here or continues falling toward $70,000-$80,000 like some predict, one thing's certain, crypto in 2025 sure does keep us on our toes.