Bitcoin News Today: U.S. Stock "Ponzi Game" Spillover Sends Crypto Markets Tumbling

The cryptocurrency market experienced a significant correction on October 9, 2025, with Bitcoin falling below $120,000 and altcoins underperforming amid broader market pressures. Yi Lihua, founder of Liquid Capital, attributed the decline to four primary factors identified through on-chain analysis and macroeconomic trends.

Bitcoin's recent surge to a record high above $126,000 created a critical resistance level that failed to break decisively. Yi Lihua noted that without a sustained positive breakout, a pullback was inevitable. This technical correction was exacerbated by short-term profit-taking after months of bullish momentum, as traders locked in gains following the all-time high.

Yi highlighted concerns over artificially inflated U.S. stock markets, particularly in AI and semiconductor sectors, which he described as operating in a "Ponzi game." The unsustainable rise in equities, driven by speculative flows, created a risk-off sentiment that spilled over into crypto markets. This dynamic was compounded by broader macroeconomic uncertainties, including potential earnings season volatility and Federal Reserve policy risks.

The Japanese yen's weakening and the Bank of Japan's (BOJ) uncertain policy direction added to market fragility. Yi emphasized that Japan's political transition and the risk of interest rate hikes could disrupt yen carry trades-a leveraged strategy that had previously fueled global asset inflows. A sudden unwind of these trades could trigger a liquidity shock, directly impacting crypto markets, as seen in August 2024 when Bitcoin fell below $50,000 during a similar yen-driven sell-off.

The recent surge in memecoins, such as Dogecoin and Shiba Inu, diverted capital from traditional altcoins, creating a "zero-sum game" that weakened broader market sentiment. Yi argued that the speculative nature of memecoins has destabilized altcoin liquidity, leading to a cascading decline in smaller-cap projects. This effect was amplified by Bitcoin's dominance (60.5%), which historically correlates with reduced altcoin performance.

The correction follows a period of consolidation after Luxembourg's 1% sovereign wealth fund allocation to Bitcoin ETFs briefly boosted prices. However, Yi Lihua dismissed this as a short-term catalyst, emphasizing that the market has digested such news without sustained upward momentum. Analysts remain divided on the long-term trajectory: while some predict altcoins could bottom by early 2025, others warn of prolonged volatility if macroeconomic risks-such as yen carry trade unwinds-intensify.