Are you wondering why Bitcoin suddenly dropped in price? On October 10, 2025, Bitcoin(BTC) experienced one of its most dramatic drops of the year from around $125,000 to as low as $102,000 in just hours. This "flash crash" wiped out over $19 billion in market value and scared many investors.

And if you are one of those people who are thinking it's an isolated incident, then my friend, you are entirely wrong….. The Bitcoin crash is deeply intertwined with U.S. politics, economic policies under President Donald Trump, institutional players like BlackRock, and broader macroeconomic trends involving gold and the U.S. dollar (USD).

This guide explains the main reasons behind the Bitcoin crash, how it happened, the real motive behind it, and what it could mean for the future. If you’ve been searching for “reasons for the Bitcoin crash” or “why Bitcoin’s price dropped,” or wondering whether BlackRock or Trump had anything to do with it, you’re in the right place.

What Happened During the Bitcoin Crash?

The October 10 Bitcoin crash happened because of several things at once, but the main trigger was a sudden announcement from President Trump. He said the U.S. would put 100% tariffs on all “critical software” from China.

This move made the U.S.-China trade fight worse and caused panic in global markets. Since crypto is seen as a risky investment, it took the biggest hit. Bitcoin crashed fast, Ethereum (ETH) fell below $3,800, and the total crypto market lost over $500 billion in value, and traders saw $19 billion wiped out in failed bets.

But here’s the twist: this didn’t seem random. Many signs suggest the crash was preplanned, timed perfectly with political and financial moves happening behind the scenes.

Key causes include:

• Geopolitical Shock from Trump's Tariffs: The Bitcoin crash started right after President Trump announced 100% tariffs on all “critical software” from China. His sudden tweet and policy update shocked global markets. Investors quickly pulled money out of risky assets like cryptocurrencies and moved to safer ones such as gold and government bonds. This triggered a sharp sell-off and accelerated the Bitcoin crash.


• Excessive Leverage and Liquidations: In the weeks before the crash, the crypto market was overloaded with leverage, many traders were borrowing large amounts to bet that Bitcoin's price would keep rising. When the tariff news broke, those risky bets began to collapse. Forced liquidations wiped out over $19 billion in a single day, the biggest loss in crypto history. Major exchanges like Binance and OKX saw millions of positions closed within hours, though the real scale might have been even higher.


• Overheated Market and Hype Cycle: Before the crash, Bitcoin's price had surged to about $125,000 during the so-called “Uptober” rally, driven by extreme optimism and hype. The market was overheated, and everyone expected prices to keep rising, a classic sign of a coming correction. As one analyst said, “When everyone's bullish, that's when things break.”

By October 13, signs of recovery appeared. Bitcoin bounced back to $115,000, while Ethereum gained 8.5% in 24 hours. Despite the chaos, institutional investors stayed confident, adding $2.7 billion into Bitcoin ETFs that same week.

Reason 1: Links to America and Trump: Policy, Power, and Crypto's New Role

The crash underscores Bitcoin's growing entanglement with U.S. politics and economy. Since Trump's inauguration in January 2025, his administration has aggressively pursued pro-crypto policies, viewing digital assets as a tool for economic dominance.

• Trump's Pro-Crypto Stance: Trump signed executive orders early in his term to support the responsible growth of digital assets and blockchain. This included establishing the U.S. Strategic Bitcoin Reserve in March 2025, funded by forfeited Bitcoin holdings, to position BTC as a national asset. Trump himself has become one of America's largest Bitcoin investors, with holdings valued at $870 million as of October 2025, boosted by a 60% price surge post-election. His family's ventures, including Trump Media's Bitcoin stockpiling, have further blurred lines between policy and personal gain.


• Impact on the Crash: While Trump's policies have generally buoyed crypto,halting government BTC sales and directing acquisitions, the tariff announcement acted as a "black swan" event. Critics argue it was insider-driven, with suspicious short positions (e.g., a whale netting $192 million pre-announcement) raising questions of manipulation. Community sentiment on platforms like X and Reddit attributes the volatility to Trump's unpredictable tweets, with one user quipping, "No amount of technical analysis can tell you that the orange guy is about to crash the market.


• Broader American Context: The U.S. holds a dominant position in crypto, with policies aimed at countering rivals like China. Trump's administration has examined ways to acquire more BTC while prohibiting sales, reinforcing Bitcoin's role in national strategy. This has led to accusations of profiting from the presidency, as Trump's wealth skyrocketed amid these shifts.

Americas embrace of crypto under Trump has made Bitcoin more sensitive to U.S. policy whims, turning it from a decentralized asset into one influenced by White House decisions.

Reason 2: BlackRock's Role: The $600 Million and Institutional Influence

• Outflows and Sales: In August 2025, BlackRock's IBIT saw $292 million in net outflows on a single day, part of broader U.S. spot Bitcoin ETF outflows totaling $333 million. Earlier reports noted BlackRock `"dumping`" over $600 million in cryptocurrencies amid market instability, but this was tied to ETF redemptions rather than direct sales. In September, Bitcoin ETFs experienced a record $363 million outflow.


• Buying the Dip: Despite occasional outflows, BlackRock has been a net accumulator. By October 2025, IBIT surpassed 800,000 BTC in assets under management, with $65 billion in aggregate inflows since launch. During the recent crash, BlackRock bought dips, including 2,830 BTC ($267 million) in one instance, even as others sold. X posts highlight BlackRock's resilience, noting they "didn`'t panic" amid Trump's tariffs.


• Correlations and Strategy: BlackRock's moves often align with broader trends, such as hedging against USD debasement. Speculative threads on X suggest coordinated "dumps" with Trump, but evidence points to market-driven actions rather than conspiracy. Harvard`'s endowment investing $116 million in IBIT underscores institutional confidence.

BlackRocks involvement stabilizes crypto but also ties it to traditional finance, amplifying U.S. economic ripples.

Reason 3: Correlations with Gold and the US Dollar: The Debasement Trade

Bitcoin, gold, and the USD are increasingly linked as investors hedge against inflation, debt, and currency weakening, especially under Trump's growth-at-all-costs policies, which dilute the dollar to repay $35 trillion in U.S. debt.

• Bitcoin and Gold: Often called "digital gold," Bitcoin has shown positive correlation with gold in 2025, both surging as safe-haven assets. Gold hit record highs while Bitcoin trailed but rebounded post-crash. The 30-day rolling correlation fluctuates, but both benefit from the "debasement trade", betting against a softening USD amid rising debt and Fed rate cuts. However, they decoupled earlier in the year, with gold up 16% while Bitcoin fell 6% by March. Post-crash, gold soared while Bitcoin dipped, highlighting gold`'s lower volatility.


• Bitcoin and USD: Bitcoin typically inversely correlates with the USD—when the dollar weakens, BTC rises. Trump's policies, including tariffs and debt dilution, pressure the USD, boosting scarce assets like BTC and gold. Central banks shifting reserves (USD share at 43% in Q1 2025) further supports this trend.


• Interconnections: In a "wall of worry" market, all three assets (stocks, gold, Bitcoin) rose together amid inflation fears. JPMorgan predicts Bitcoin could hit $165,000 by year-end, undervalued versus gold. The crash flushed leverage, setting up a potential rally as liquidity returns.



Asset	2025 Performance (YTD as of Oct 13)	Key Correlation Insight
Bitcoin	+45% (from ~$79,000 start)	Positive with gold (~0.4–0.6 rolling); inverse with USD (-0.3)
Gold	+28% (to ~$2,650/oz)	Near-zero with equities; slight negative with USD
USD Index	-5% (weakening)	Pressured by U.S. debt and tariffs; boosts scarce assets

Insights from the Reddit Analyst

A Reddit post that predicted the crash on October 1, calling it a "pump then dump" trap. He foresaw Bitcoin dropping to $106,000 (close to the actual $111,000 low) and expects the correction to continue until mid-October, followed by a parabolic rally to $150,000 by year-end. Reasons: Clearing leverage and weak hands, with Fed rate cuts and institutional demand fueling recovery. Comments were skeptical, viewing predictions as "broken clocks," but some agreed on a post-crash bounce.

What Does This Mean for Bitcoin's Future?

The crash reveals crypto's maturation: No longer fringe, it's now a geopolitical and economic barometer. Trump's America is positioning Bitcoin as "strategic," but this introduces volatility from policy swings. For gold and USD seekers, Bitcoin offers a high-reward hedge—expect more upside as debasement fears grow, but with sharper corrections.

Investors: Watch U.S. policy, ETF flows, and leverage metrics. The bull market persists, but selectivity is key. As one X post noted, "Dump is temporary; pay attention to global M2,it's going way higher, and Bitcoin will follow."

Conclusion

The crash flushed out weak bets, which could set up a rebound. Bitcoin is up 45% in 2025 so far. Experts like JPMorgan say it could hit $165,000 by year-end. But watch for more tariffs or Fed news. For now, it's a reminder: Crypto is volatile, don't bet more than you can lose."

If you're new, think of Bitcoin as "digital gold." It crashes sometimes but often comes back stronger. Stay informed on "Bitcoin price predictions" and "crypto market recovery."

Key Takeaway: The Bitcoin crash in October 2025 was mainly from Trump's tariffs, too much leverage, and market hype. It's not the end, many see a big rally soon.