Bitcoin Update: Worldwide Economic Struggles Push Investors Toward Gold as Concerns Over Credit Lead to Crypto Sell-Off
- Major cryptocurrencies like Bitcoin and Ethereum fell over 9-20% this month as investors shifted to gold and silver , which surged 4-9% amid global fiscal concerns. - Market struggles stem from overleveraged positions, credit freeze fears, and liquidity risks in crypto treasuries competing with sovereign debt and AI ventures for capital. - Institutional ETF inflows reached $6.4B in October 2025, but $1.1B in 24-hour liquidations highlights volatility and eroding confidence despite improved market structu
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The difficulties facing the crypto market are the result of several factors, such as excessive leverage and anxiety over a potential credit crunch impacting digital asset treasuries (DATs). Greg Magadini, derivatives director at Amberdata, pointed out that positive drivers—including the resolution of a potential U.S. government shutdown and anticipated Federal Reserve rate cuts—have already been factored into prices,
The contrasting movements highlight a shift in investor risk preferences, with crypto's speculative appeal standing in stark contrast to gold's established reputation as a safeguard during economic turmoil. Magadini noted that gold typically leads Bitcoin by around 80 days,
Meanwhile, institutional players have shown persistence, with crypto ETFs attracting $6.4 billion in inflows during October 2025. Analysts like Matthew Kimmell from CoinShares believe that the present downturn does not indicate a prolonged crypto bear market, citing stronger market infrastructure and reduced leverage compared to previous cycles. Still, the $1.1 billion in forced liquidations over a 24-hour period in mid-November—mainly from leveraged traders closing long positions—has heightened volatility and shaken market confidence.
As these factors play out, the balance between crypto's inherent risks and gold's safe-haven status will remain crucial. Whether this pullback is temporary or signals a more significant shift in asset allocation will depend on broader economic clarity, regulatory changes, and the crypto market's ability to restore liquidity. For now, investors are favoring gold's lasting appeal while keeping a close watch for any signs of a crypto market recovery.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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