Bitcoin News Today: Crypto's $1T Crash Unveils Regulatory and Macroeconomic Time Bomb

The cryptocurrency market in October 2025 experienced a significant correction, driven by macroeconomic pressures, regulatory shifts, and institutional reallocation. Bitcoin (BTC) and Ethereum (ETH) faced sharp declines, with BTC's dominance dropping to a yearly low of 57% as capital flowed into altcoins like Solana (SOL), whose dominance hit 3.36% amid heavy institutional inflows. The crash, triggered by Trump's "Liberation Day" tariff announcements and the SEC's regulatory actions, erased nearly $1 trillion in market value within 90 days, reducing the total crypto market cap to $2.50 trillion .

Institutional flows shifted toward Layer-1 blockchains, which gained traction as stablecoin regulations tightened. Ethereum and Solana, in particular, attracted capital due to their utility in cross-border transactions and DeFi infrastructure. On-chain metrics revealed weakened momentum, with Bitcoin fees cooling from $2 million during the election cycle to $500k post-crash, signaling reduced organic activity . Meanwhile, the U.S. passed the GENIUS Act, establishing federal oversight for stablecoins and mandating 1:1 backing with cash or Treasuries, while the EU's MiCA framework enforced stricter investor protections and cross-border compliance .

The crash highlighted systemic risks, including leverage in retail trading and stablecoin vulnerabilities. A $19.31 billion liquidation event in October 2025-driven by Trump's 100% tariffs on Chinese imports-exposed the fragility of leveraged positions, particularly in altcoins. Stablecoins like USDT and USDC faced scrutiny, with Tether under investigation for alleged sanctions violations and EURCV gaining traction in the EU . Analysts warned that relaxed U.S. crypto regulations, such as the proposed FIT21 Act, could exacerbate financial instability by blurring lines between traditional and crypto markets .

Post-crash, institutional adoption of Layer-1s accelerated, with Ethereum's dominance rebounding to 15% and on-chain ETF inflows supporting ETH's price. However, macroeconomic headwinds, including inflation and geopolitical tensions, remained critical risks. The Atlantic noted that Trump's pro-crypto agenda, while fostering short-term growth, risked creating a "bubble" with long-term consequences for financial stability .

Sources:

[1] 2025's crypto boom – Why some fear a crash is coming next (https://pro-blockchain.com/en/2025-s-crypto-boom-why-some-fear-a-crash-is-coming-next)

[2] The Great Crypto Crash - The Atlantic (https://www.theatlantic.com/ideas/archive/2025/01/cryptocurrency-deregulation-future-crash/681202/)

[4] Bitcoin Price Crash Fears Gather As Crypto Braces For ... (https://www.forbes.com/sites/digital-assets/2025/08/19/wall-street-issues-serious-66-trillion-crypto-warning-as-price-crash-fears-hit-bitcoin-ethereum-and-xrp/)

[8] Crypto rule comparison: the US GENIUS Act versus EU's MiCA (https://www.weforum.org/stories/2025/09/us-genius-act-eu-mica-convergence-crypto-rules/)