Written by Xiao Bing
BTC has dropped below $82,000, and altcoins are all in the red. At the same time, Nasdaq is declining, led by losses in the technology sector. This isn’t just an issue within the crypto market—it’s money exiting all risk assets.
To understand this pullback, first recognize one key line: the U.S. 30-year Treasury yield at 5.70%, the highest since 2002.
What story is the bond market telling?
The anchor for all asset prices is the risk-free rate. When U.S. Treasuries offer an annualized return of 5.3% to 5.7%, backed by government credit, you need a very strong reason to allocate your funds to BTC or NVIDIA.
In the first week of October, the 10-year U.S. Treasury yield reached 5.35%, hitting a 24-year high. The 30-year yield was even higher at 5.70%, a level not seen since the dot-com bubble burst in 2002.
Why is the yield rising? Two things are happening at once.
Oil prices were the catalyst. Brent crude rose to $110 in October, as Houthi attacks targeted Riyadh’s airport, tankers were attacked near Yemen, and Iran’s stance on the Strait of Hormuz remained ambiguous. Rising energy costs directly fueled inflation expectations, causing bond markets to price in the possibility that the Fed would not cut rates—and might even hike them.
Fiscal pressure is the underlying theme. U.S. government debt continues to expand, with no sign of relief in bond supply pressures, and demand for several Treasury auctions has been weak. Excess supply over demand has led to lower prices and higher yields.
The Fed then raised rates by 25 basis points to a range of 3.75%-4.00% in September. According to the meeting minutes released on October 7, nine of the 18 committee members believed another rate hike was still needed before the end of the year. The market currently assigns a roughly 20% probability of a rate hike on October 28, but the probability of a hike in December has exceeded 80%.
For risk assets, the implication of this combination of measures is straightforward: the cost of capital is rising, and there’s no sign of a turnaround in the near term. Money won’t stay in high-volatility assets unless the expected returns can cover this cost.
BTC: Dropped from 83,000 to 81,000—leverage died first.
BTC remained stuck in the $83,000 to $87,000 range throughout early October, repeatedly testing the upper boundary but failing to break through. On October 8, it finally chose a direction, breaking downward.
After breaking below the $81,500 support level, leveraged positions began triggering a cascade of liquidations. According to CoinGlass data, $1.16 billion in total positions were liquidated within 24 hours, with 90% being long positions. Approximately 190,000 accounts were affected. The largest single liquidation was an ETH position on Hyperliquid, worth nearly $20 million. Open interest in futures contracts decreased by 5.9% over 24 hours to $143.2 billion.
On the same day, U.S. spot BTC ETFs experienced a net outflow of $484.9 million, the largest single-day outflow since June 25. BlackRock’s IBIT saw an outflow of approximately 2,430 BTC, Fidelity around 1,230 BTC, and ARK 21Shares about 1,190 BTC. ETH ETFs fared even worse, with net outflows occurring every trading day since September 29.
The 20-day moving average for BTC has been broken. Technically, the next strong support is at $75,000; if this level fails to hold, $70,000 will be the next line of defense.
Altcoins: Higher leverage, thinner liquidity, harder falls
BTC is down 3%, and altcoins are down 10% to 30%—this has become normal, but seeing the actual numbers still feels shocking.
24-hour decline on October 13: BOME down 30%, BLUR down 29%, STRK down 28%, CKB down 22%, ENA down 15%, NEAR down 13%. ETH fell 5.3% on October 8 and dropped 9.3% over the week. SOL declined to $108, and DOGE fell to $0.083, both down approximately 7%.
Why do altcoins always drop more sharply?
The reason is simple: the order book is thin. A $1 million sell order might move the BTC market by only 0.1%, but on a altcoin with daily trading volume in the millions of dollars, it could create a 5% price gap. In perpetual futures markets, retail traders often use high leverage, so even a small price movement triggers liquidations, which further accelerate the price decline, creating a vicious cycle.
Funds are clearly moving: withdrawing from smaller cryptocurrencies and flowing back into BTC and stablecoins. BTC’s market share percentage is rising. The only winners in this correction are USDT and USDC.
A few exceptions: Monero fell only 2.2% this week, and TRON dropped less than 1% that day. Both projects share the characteristic of having real-world use cases and ongoing on-chain activity, making them safe havens during periods of panic.
U.S. stocks: It's not just about crypto
If the crypto market were declining in a vacuum, the cause could be attributed to industry-specific issues. But when both Nasdaq and BTC are weakening simultaneously, the problem lies further upstream.
October 12 U.S. market close: Nasdaq fell 0.44%, S&P 500 dipped 0.06%, while only the Dow Jones managed a marginal gain, supported by energy and consumer staples sectors. Technology was the weakest sector of the day, declining 1.25%. Russell 2000 fell 0.45%, with small-cap stocks facing more pronounced pressure.
The worst performer was the Korean stock market: on the morning of October 13, amid escalating Middle East tensions and a sharp decline in the semiconductor sector, South Korea’s KOSPI index opened sharply lower by 3.1% at 6,186.08, with losses quickly expanding to over 4%.
The logic applies equally to crypto markets: Treasury yields are at historical highs, expectations for further rate hikes remain strong, and oil prices stay elevated. Tech stocks and crypto assets are the longest-duration risk assets and are most sensitive to interest rates. When risk-free yields rise from 3% to above 5%, all assets priced on "future growth" narratives must be repriced.
Nasdaq reached a new all-time high in early October but failed to hold it. The pullback after the breakout indicates that bullish momentum lacked continuation at higher levels, and profit-taking positions chose to exit.
What should we look at next?
This week is a data-intensive week.
On October 14, the September CPI data was released. This is the most important data point before the FOMC meeting on October 28. If inflation exceeds expectations, the market will immediately raise the probability of an October rate hike from 20% or higher, triggering further downside pressure on risk assets. If inflation comes in below expectations, the market will breathe a sigh of relief, and BTC and the Nasdaq could both see short-term rebounds.
On October 15, there will be PPI and retail sales data; on October 16, Fed Chair Warsh will speak at the IMF Annual Meeting. Warsh stated at the September meeting that “inflation is too high and has been too high for too long”—the market is watching to see if his stance has softened.
Bank earnings reports are also coming in thick this week. JPMorgan Chase, Goldman Sachs, and Citigroup all released their quarterly reports on Tuesday. Analysts expect overall earnings growth of approximately 30% for S&P 500 companies this quarter. If actual results and guidance meet or exceed these expectations, U.S. equities could stabilize; if they fall short, combined with the high-interest-rate environment, the market correction could deepen.
In summary, the correlation between BTC and the Nasdaq has been steadily increasing over the past two years. This synchronized movement is unlikely to change in the short term; to gauge the direction of the crypto market, first look at the CPI report.