The past year has been remarkable for the cryptocurrency sector, with leading assets such as Bitcoin ( BTC -3.46%) and Ethereum ( ETH -6.41%) reaching unprecedented price levels. However, that bullish momentum has recently paused. As of September 25, Bitcoin has dropped 5% over the past week, Ethereum has declined by 13%, and XRP ( XRP -6.35%) has lost more than 9% in the same timeframe.
What’s causing this recent slump? And could the so-called Uptober—a nickname referencing historical October price increases—reverse the current trend? Let’s explore three major challenges cryptocurrencies are facing at the moment.
1. Capital is exiting crypto ETFs
The crypto market is often influenced by a “buy the rumor, sell the news” mentality. Anticipation of significant events can push prices higher, only for them to fall once the event occurs and investors cash out. Leading up to the Federal Reserve’s rate decision on September 17, crypto prices surged and spot Bitcoin ETFs experienced strong inflows.
However, after investors processed Federal Reserve Chair Jerome Powell’s comments, caution set in. In particular, Powell’s recent remarks about the “challenging situation” of balancing employment and inflation risks made investors more wary. While lower interest rates can make riskier assets more appealing, those advantages may be outweighed by broader economic worries.
Market sentiment plays a crucial role in crypto, and currently, the fear and greed index indicates a strong sense of fear. This is evident in the significant withdrawals from spot crypto ETFs. According to The Block, spot Bitcoin ETFs saw over $360 million in outflows on September 22. Fidelity Wise Origin Bitcoin Fund ( FBTC -3.62%) alone accounted for $277 million of that total, marking one of the largest single-day outflows this year.
2. Over $1.6 billion in liquidations in a single day
Data from CoinGlass reveals that more than $1.6 billion was liquidated on September 21—the highest daily total so far in 2025. Ethereum positions accounted for over $500 million, while Bitcoin positions made up about $300 million of the total. These liquidations demonstrate how quickly leveraged trades can unravel as falling prices trigger forced sales, pushing prices down even further.
Margin and leverage are common in crypto trading, amplifying price swings. The use of leverage in the crypto market is on the rise. Investors can pledge their crypto as collateral to borrow funds and take larger positions. If the market moves in their favor, returns are magnified. But if prices drop and collateral is insufficient, brokers may liquidate positions to recover their funds.
3. Crypto treasury firms are struggling
This year, more companies have started holding cryptocurrencies—mainly Bitcoin and Ethereum—on their balance sheets. Publicly traded firms now collectively own about 5% of all Bitcoin in circulation, according to BitcoinTreasuries. Their ongoing purchases have contributed to Bitcoin’s impressive rally.
Led by Strategy ( MSTR -7.14%), nearly 200 companies now hold crypto assets. Many have raised capital specifically to acquire more. These holdings can serve as an inflation hedge, and any price gains boost their financial results. However, if Bitcoin’s value drops, so does the worth of these assets, and companies may be forced to sell to cover debts.
The corporate treasury approach is now being questioned. Companies are purchasing fewer Bitcoins, and according to K33, a quarter of Bitcoin treasury firms have a market capitalization below the value of their crypto holdings. Some are even taking on debt to fund share buybacks, raising concerns about the sustainability of this strategy.
Image credit: Getty Images.
More volatility on the horizon
There’s been considerable speculation in crypto circles about whether Uptober will bring a shift in sentiment, as historical data shows Bitcoin often dips in September and rebounds in October.
However, the issues currently weighing on crypto prices won’t simply disappear with the turn of the calendar. Keep an eye on employment and inflation statistics, as these will not only influence future Fed rate decisions but also provide insight into the broader economic outlook.
Despite these challenges, Bitcoin remains above $111,000, and there could be positive catalysts before year’s end. Additional rate cuts are expected, the SEC may approve more crypto ETFs, and further progress on crypto regulation is possible.
Regardless of whether the bulls regain control, the latest price fluctuations highlight Bitcoin’s inherent volatility. Crypto remains a highly speculative and unpredictable investment, so it’s wise to keep your exposure to a modest portion of your overall portfolio.
