Bitcoin Plunges 40% From October Peak: What’s Next for Crypto?

Bitcoin's brutal correction slashes 40% off its October highs—triggering flashbacks of crypto winters past.

The Technical Breakdown

Charts don't lie. That 40% drop from the peak isn't just a dip—it's a full-blown technical reset. Support levels cracked like thin ice. The momentum indicators flipped from greed to fear faster than a trader can hit 'sell.' This isn't unusual volatility; it's the market violently repricing risk after an overheated run.

Behind the Sell-Off

Liquidity vanished. Leveraged positions got liquidated en masse, creating a cascade of automated selling. Macro winds shifted, with traditional finance suddenly looking less like a safe harbor and more like a competing storm. The usual suspects—regulatory murmurs, exchange outflows, miner pressure—all played their part. A perfect storm of profit-taking and panic.

The Bull Case Amid the Bloodbath

History rhymes. Every major Bitcoin bull run has been punctuated by gut-wrenching corrections of 30%, 40%, even 80%. These drawdowns shake out weak hands and reset the stage for the next leg up. For long-term believers, this is a feature, not a bug—a chance to accumulate at prices that seemed impossible just months ago. The network fundamentals haven't changed; only the sentiment has.

Navigating the Volatility

Don't catch a falling knife, but don't abandon the surgery either. This is where discipline separates tourists from residents. Dollar-cost averaging becomes your best friend. Rebalancing portfolios away from pure speculation back toward core infrastructure assets makes sense. And maybe—just maybe—ignore the hourly charts for a while. (A novel concept in a world of 24/7 trading, we know.)

The dip-buyers are already whispering. The 40% discount from the peak looks tempting to those who missed the last rally. Just remember, in crypto, a 'buying opportunity' can sometimes feel like catching a safe dropped from a tenth-story window—potentially rewarding, but not for the faint of heart. As one cynical fund manager put it: 'We're not in a bear market; we're just between tweets.' The only certainty? Volatility is the price of admission.

Price drop threatens companies and miners

Bitcoin dropped under $73,000 on Tuesday, hitting its lowest level since Donald TRUMP returned to the White House in 2025. Some analysts blame the fall on weak flows, poor liquidity, and fading interest. Others say crypto traders are shifting toward betting markets instead of sticking with coins.

But Burry thinks this isn’t just a blip. He said Bitcoin has no reason to stop falling. Even with adoption from corporate treasuries and new exchange-traded funds, the price hasn’t found support.

He warned that nearly 200 public companies holding Bitcoin are now at risk. Once their accountants mark down those holdings, the pressure to sell will get worse.

“There is no organic use case reason for Bitcoin to slow or stop its descent,” Burry wrote. And when Bitcoin keeps dropping, he said CFOs will tell their teams to get out.

Treasuries aren’t long-term bets. They get marked to market. When Bitcoin tanks, it hits financial reports directly. Burry said risk managers won’t sit around and hope. They’ll cut.

He also pointed to the surge in spot Bitcoin ETFs. Instead of helping, he says they’ve made Bitcoin even more speculative.

He said the ETFs have raised Bitcoin’s ties to the stock market, and the coin’s correlation with the S&P 500 has now reached around 0.50. That means if stocks fall, Bitcoin could fall harder.

Outflows, tokenized metals and growing damage

Burry noted that ETFs have seen some of their worst daily outflows since November. Three big ones happened just in the last ten days of January. That’s not small money leaving. It’s investors giving up.

He also said crypto is leaking into other markets. Even though Bitcoin’s market cap is under $1.5 trillion, and household exposure is low, the impact is spreading. To cover losses, traders are dumping other assets, especially tokenized gold and silver futures.

Those contracts aren’t backed by real metal. When they get sold off in bulk, they pull down the real metals market too.

Burry said this creates what he called a “collateral death spiral.” At the end of last month, he estimated that up to $1 billion in precious metals was liquidated just because of falling crypto prices.

If Bitcoin falls to $50,000, Burry said miners WOULD go broke and tokenized futures would crash with no one left to buy them. He blamed recent losses in gold and silver directly on crypto-linked selling. “Sickening scenarios have now come within reach,” he wrote.

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