Why This Crypto Selloff Happened — Cross-Checked Summary (Oct 12, 2025)
1. Immediate trigger — U.S.–China tariff shock
Policy headlines flipped risk assets to risk-off, hitting equities and crypto simultaneously.
2. Leverage cascade
Roughly $19B in 24-hour liquidations and ~1.6M accounts wiped. Low-liquidity hours amplified the move.
3. Liquidity & microstructure fragility
Spot depth in BTC/ETH proved more resilient, but altcoin order books were thin—hence outsized alt drawdowns.
4. Momentum fatigue & flow deceleration
After a record $5.95B weekly net inflow into spot BTC ETFs, optimism was crowded. The policy shock landed just as inflows slowed, delaying absorption even though structural demand remains intact.
5. Other contributors
Global equities weakened (higher beta to risk), and concentrated derivatives liquidations magnified the drop.
One-line conclusion:
Policy shock pulled the trigger; excess leverage and thin alt liquidity turned it into a cascade, and slower ETF/stablecoin inflows reduced the market’s ability to absorb it.
1. Immediate trigger — U.S.–China tariff shock
Policy headlines flipped risk assets to risk-off, hitting equities and crypto simultaneously.
2. Leverage cascade
Roughly $19B in 24-hour liquidations and ~1.6M accounts wiped. Low-liquidity hours amplified the move.
3. Liquidity & microstructure fragility
Spot depth in BTC/ETH proved more resilient, but altcoin order books were thin—hence outsized alt drawdowns.
4. Momentum fatigue & flow deceleration
After a record $5.95B weekly net inflow into spot BTC ETFs, optimism was crowded. The policy shock landed just as inflows slowed, delaying absorption even though structural demand remains intact.
5. Other contributors
Global equities weakened (higher beta to risk), and concentrated derivatives liquidations magnified the drop.
One-line conclusion:
Policy shock pulled the trigger; excess leverage and thin alt liquidity turned it into a cascade, and slower ETF/stablecoin inflows reduced the market’s ability to absorb it.