Bitcoin News Today: Bitcoin's 'Digital Gold' Narrative Shaken as $19B Crash Exposes Market Fragility

Bitcoin's meteoric rise to an all-time high of $126,000 this week was abruptly interrupted by a sharp sell-off following President Donald Trump's announcement of 100% tariffs on Chinese imports, triggering the largest liquidation event in crypto history. The price of bitcoin plummeted nearly 18% within 24 hours, erasing $1.5 trillion in market value, while gold-another asset benefiting from the U.S. dollar's decline-hit a record $4,000 per ounce. The turmoil underscores growing concerns over dollar devaluation, geopolitical tensions, and the fragility of leveraged positions in crypto markets.

The initial surge in both Bitcoin and gold this year was fueled by a "debasement trade," as investors flocked to scarce assets amid inflation and money-printing policies. Citadel CEO Ken Griffin told Bloomberg that the dollar's 10% drop this year-the largest six-month decline in half a century-has driven capital into gold and crypto as hedges. Gold's 50% gain since January and Bitcoin's 33% rally reflected a broader shift toward non-sovereign stores of value. Analysts like Henrik Andersson of Apollo Capital argued Bitcoin's scarcity and 24/7 liquidity position it to outperform gold in the long term.

However, the recent crash exposed vulnerabilities in crypto's leveraged ecosystem. Trump's tariff announcement on October 10 sparked panic, with $19 billion in liquidations across the market. Bitcoin dropped below $103,000, while altcoins like Solana and XRP fell over 20%. The sell-off was exacerbated by the timing: major Bitcoin ETFs, including BlackRock's $94 billion IBIT, were closed during the weekend crash, leaving investors unable to hedge their exposure. Tommy Doyle of Xapo Bank noted this highlights the need for 24/7 liquidity solutions for institutional investors.

The U.S. dollar's weakness, driven by inflation and fiscal deficits, remains a key factor. The dollar has lost 10% of its value this year, prompting central banks to hold more gold than Treasuries for the first time since 1996. Meanwhile, Bitcoin's correlation with gold has weakened, with a 30-day correlation of just 0.11, challenging its "digital gold" narrative. Yet, some experts see Bitcoin as a technological disruptor. David Foley of the Bitcoin Opportunity Fund noted that while gold often leads, Bitcoin's adoption and halving events could eventually make it the dominant safe-haven asset.

Looking ahead, the market's next move hinges on Trump's trade policies and potential Fed action. While Bitcoin's 365-day EMA and $100,000 support level remain critical technical benchmarks, analysts warn of further volatility. Morgan Stanley's expansion of crypto access to all clients and ongoing ETF approval hopes suggest long-term institutional interest, but short-term risks persist. As Charlie Erith of Wiston Capital observed, "The market is testing whether Bitcoin can hold its trend amid macro shocks-a test it hasn't fully passed yet."

[1] Forbes Digital Assets – Serious U.S. Dollar Fed Warning Triggers Sudden Bitcoin and Gold All-Time High Price Surge (https://www.forbes.com/sites/digital-assets/2025/10/07/serious-us-dollar-fed-warning-triggers-sudden-bitcoin-and-gold-all-time-high-price-surge/)

[2] Cointelegraph – Gold Hits Milestone $4,000 ATH-What It Means for Bitcoin (https://cointelegraph.com/news/gold-hits-milestone-4000-ath-what-it-means-bitcoin)

[3] Gold-Eagle – Gold Hits New All-Time High: What Does This Mean for Bitcoin? (https://www.gold-eagle.com/gold-hits-new-all-time-high-what-does-mean-for-bitcoin)

[6] Forbes Digital Assets – Trump Surprise Triggers Huge Crypto Flash Crash as Traders Brace for Bitcoin, Ethereum, XRP, BNB and Solana Price Wipeout (https://www.forbes.com/sites/digital-assets/2025/10/12/trump-surprise-triggers-huge-crypto-flash-crash-as-traders-brace-for-bitcoin-ethereum-xrp-bnb-and-solana-price-wipeout/)

[9] CoinDesk – Altcoins Cratered in Oct. 10 Crypto Flash Crash as Bitcoin Held Up-Wiston Capital Says (https://www.coindesk.com/markets/2025/10/12/altcoins-cratered-in-oct-10-crypto-flash-crash-as-bitcoin-held-up-wiston-capital-says)

[12] Financial Content – Crypto Markets Reel from $19 Billion Crash Amidst Intensifying US-China Trade War Fears (https://markets.financialcontent.com/stocks/article/breakingcrypto-2025-10-12-crypto-markets-reel-from-19-billion-crash-amidst-intensifying-us-china-trade-war-fears)