The Bitcoin market is entering a new phase, recovering from a recent, brief corrective phase triggered by a massive over $20 billion liquidation event. However, robust inflows from institutional investors into spot Bitcoin ETFs continue, underpinning the market's structural strength. Furthermore, the expansion of access to crypto investments for retail investors by major financial institutions like Morgan Stanley provides a strong tailwind, further solidifying Bitcoin's status as an asset class. Considering these factors, the current market bias is assessed as shifting from Neutral to Slightly Bullish. We anticipate a return to the long-term uptrend, moving beyond the short-term noise.

## Fundamental Analysis ### Regulatory Developments: US Government Shutdown, EU, UK, Luxembourg, and Other National Regulatory/Policy Changes Multiple regulatory news items released on Friday, October 10, 2025, have the potential to impact the cryptocurrency market, particularly Bitcoin's future price trajectory, through both short-term uncertainty and medium-to-long-term structural changes. In the United States, a government shutdown has curtailed the activities of federal agencies, including the Securities and Exchange Commission (SEC), temporarily halting regulatory decisions concerning cryptocurrencies, such as the approval process for Bitcoin ETFs. This exacerbates the temporary uncertainty surrounding U.S. regulatory decision-making for market participants, especially institutional investors. While the promotion of Jonathan McKernan to U.S. Treasury Deputy Secretary for Domestic Finance has been interpreted by some as potentially signaling a more crypto-friendly stance, proactive regulatory movements are likely to remain limited as long as the shutdown persists. Meanwhile, the UK's Financial Conduct Authority (FCA) has lifted restrictions on crypto-backed Exchange-Traded Notes (ETNs) for retail investors. This move acknowledges the growing maturity of the crypto market and permits broader investor access, potentially boosting market liquidity and institutional participation. However, it is important to note that derivative products remain excluded. News that Luxembourg's sovereign wealth fund allocated 1% of its portfolio to Bitcoin ETFs is highly symbolic, representing an investment of public funds into digital assets. This is expected to lower the psychological barrier for other sovereign wealth funds and institutional investors considering incorporating digital assets into their portfolios. In Kenya, East Africa, legislation governing Virtual Asset Service Providers (VASPs) has been passed, advancing the development of licensing regimes and consumer protection standards, highlighting regulatory efforts in emerging markets. The European Securities and Markets Authority (ESMA) is moving towards regulating crypto exchanges and other service providers at the European level, aiming to address market fragmentation and enhance global competitiveness. This initiative promotes regulatory harmonization within the EU and could become a factor in varying compliance costs. The Bank of England (BoE) is reviewing regulations concerning stablecoin holding limits, seeking flexibility to ensure companies can maintain required reserves. These diverse regulatory trends are intricately influencing the structure of the international cryptocurrency market. While regulatory uncertainty in the U.S. may heighten short-term volatility, developments in the UK, Luxembourg, EU, and Kenya point towards regulatory clarity and market maturation, fostering long-term institutional trust. Specifically, the investment by a sovereign wealth fund into Bitcoin ETFs suggests Bitcoin's transition from a mere speculative asset to a serious consideration within institutional portfolios, potentially forming the basis for future price appreciation. ### Massive Liquidation Event: Over $20 Billion in Liquidations and Deterioration of Market Sentiment A massive cryptocurrency liquidation event, exceeding $20 billion (with some reports indicating even higher figures), occurred around October 10, 2025, sending shockwaves through the market and rapidly deteriorating investor sentiment. The primary trigger for this liquidation was U.S. President Trump's announcement of imposing a 100% tariff on Chinese imports. This announcement reignited concerns about escalating U.S.-China trade tensions, prompting capital outflows from risk assets in general, and the cryptocurrency market in particular. Data from sources like CoinGlass indicates that the total liquidation volume was the largest on record, significantly surpassing figures seen during the COVID-19 pandemic and the FTX collapse. Major exchanges including Hyperliquid, Bybit, and Binance accounted for the majority of these liquidations. Consequently, the price of Bitcoin (BTC) temporarily plunged to around $102,000, with discrepancies observed across exchanges (e.g., $107,000 on Coinbase, $102,000 on Binance futures). Major altcoins such as Ethereum (ETH) and Solana (SOL) followed suit with sharp declines. The deterioration of market sentiment was evident as the Crypto Fear & Greed Index plummeted to the 'Fear' level of 27, its lowest point in approximately six months. The CEO of Crypto.com's call for a regulatory investigation into exchange fairness related to this event further heightened concerns regarding market integrity. Issues like price de-pegging observed with certain tokens on Binance also sparked discussions about potential exchange system risks and price manipulation. From an institutional investor's perspective, this event carries several key implications. Firstly, it reinforces Bitcoin's perception as a risk asset sensitive to macroeconomic risks, particularly geopolitical tensions and trade wars. The increasing correlation with the AI sector (see Article 27) strengthens this aspect. Secondly, while massive liquidations purge excessive leverage and exert downward price pressure temporarily, they also serve to flush out "weak hands" and reset the market. This could potentially pave the way for a healthier upward trend in the medium term. Thirdly, concerns regarding exchange transparency and pricing fairness may accelerate regulatory scrutiny, potentially leading to increased compliance costs and operational risks for exchange operators. The record-breaking liquidations and subsequent sentiment downturn will likely exert downward pressure on Bitcoin's price in the short term, potentially testing the psychological support level around $100,000. However, this deleveraging event, by cooling market exuberance, might serve as a "reset" facilitating the next upward move, suggesting a potential for market consolidation. In the long term, the growing maturity and regulatory clarity within the cryptocurrency market are expected to enhance resilience against such shocks. ### Continued Inflows into BTC ETFs: $2.71 Billion in Weekly Inflows During the second week of October 2025 (October 7-10), net weekly inflows into U.S. spot Bitcoin ETFs reached $2.71 billion, demonstrating sustained robust institutional demand for cryptocurrencies, particularly Bitcoin. This inflow supports the momentum of "Uptober" (an anomaly suggesting October tends to be a bullish month for Bitcoin) and serves as a strong tailwind for positive market sentiment. Notably, Monday of the second week saw a daily net inflow of $1.21 billion, the second-largest since the ETFs' inception. BlackRock's iShares Bitcoin Trust (IBIT) led the inflows, recording a daily net inflow of $74.2 million and reaching total assets under management (AUM) of $65.26 billion. Despite outflows observed from other major ETFs like Fidelity's FBTC and Grayscale's GBTC, the overall positive capital flows bolstered the market. This institutional demand remained resilient even amidst market turmoil triggered by President Trump's announcement of 100% tariffs on China, which resulted in a net outflow of $4.5 million on Friday, October 10. This suggests the prevalence of a longer-term investment thesis valuing Bitcoin as "digital gold," a hedge against inflation, or a countermeasure against USD depreciation, overriding short-term macroeconomic risks. Furthermore, expectations for the expansion of the ETF market remain high, with 21 new cryptocurrency ETF applications filed with the SEC within the first eight days of October. While potential delays due to the government shutdown exist (see Article 22), the overall interest and investment appetite for the ETF market remain significant. From an institutional perspective, investing in Bitcoin via ETFs offers significantly lower barriers compared to traditional methods concerning custody, regulation, and liquidity, thus facilitating portfolio inclusion. Continued ETF inflows are expected to increase market liquidity, streamline price discovery mechanisms, and reduce volatility, which are crucial elements in establishing Bitcoin's position as an established asset class in broader financial markets. State Street's report (Article 14) also predicts a continued increase in institutional allocation towards digital assets, with ETFs expected to remain a primary channel. News that Morgan Stanley is allowing all clients to invest in crypto funds (Article 21) could further expand retail investor inflows, complementing ETF demand. Regarding Bitcoin's price, sustained ETF inflows will act as a floor against short-term market fluctuations (e.g., sharp declines due to tariff announcements). In the medium-to-long term, this steady institutional demand will continue to be one of the strongest fundamental drivers underpinning Bitcoin's price appreciation trend. ### Projection of Increased Institutional Digital Asset Allocation: State Street Report A recent joint research report by State Street Corporation and Oxford Economics indicates a significant expansion of institutional engagement with digital assets in the coming years, holding crucial implications for Bitcoin and the broader cryptocurrency market. The report projects that the current average allocation to digital assets within institutional portfolios, approximately 7%, is set to double to 16% by 2028. This clearly signals that institutional investors are beginning to view digital assets not merely as a niche investment but as an integral part of their portfolios. While stablecoins and tokenized equities and bonds constitute the majority of current portfolio composition, cryptocurrencies are delivering the most notable returns, with 27% of respondents citing Bitcoin and 21% citing Ethereum as the top-performing assets. This highlights institutional recognition of the importance of major cryptocurrencies like Bitcoin and Ethereum in pursuit of risk-adjusted returns. The report also identifies the tokenization of Real World Assets (RWAs) as the area institutions expect to benefit from first. Furthermore, over half of respondents anticipate that 10% to 24% of their investments will be conducted through digital or tokenized financial instruments by 2030, underscoring the irreversible trend of financial market digitalization. Notably, Distributed Ledger Technology (DLT) and Artificial Intelligence (AI) are recognized as playing pivotal roles in institutional digital transformation strategies. Approximately half of the respondents agreed that advancements in generative AI will accelerate digital asset development, suggesting potential enhancements in the efficiency and security of smart contracts, blockchain, and token development. From an institutional perspective, this report is significant for several reasons: 1. The clear projection of continued and substantial growth in digital asset investment signals overall market growth potential and supports expectations of sustained capital inflows. 2. The outperformance of Bitcoin and Ethereum is likely to further drive investment into these major cryptocurrencies. 3. The tokenization of RWAs and advancements in AI technology could create new investment opportunities beyond Bitcoin and other cryptocurrencies or blockchain-related projects. 4. The emergence of a hybrid model (fusion of traditional finance and DeFi), as suggested by the report, indicates institutional focus on strategies that leverage existing infrastructure while capturing the benefits of digital assets. However, as the report points out, a portion of institutions (14%) still do not believe traditional trading and custody infrastructure will be entirely replaced, suggesting potential market bifurcation or coexistence. Regarding Bitcoin's price impact, the projected increase in institutional allocation serves as a strong fundamental driver underpinning medium-to-long-term price appreciation. A doubling of allocation by 2028 implies significant capital inflows into Bitcoin and other major digital assets, solidifying its status as an asset class. While short-term price fluctuations may be influenced by macroeconomic factors and regulatory developments, the increasing institutional demand is poised to significantly drive up the value of Bitcoin in the long run. ### Major Asset Manager Opens Doors to Retail Investors: Morgan Stanley The news that Morgan Stanley, one of the world's largest wealth management firms, decided on October 15, 2025, to permit all its clients to invest in cryptocurrency funds, holds the potential to significantly expand retail investor access to the cryptocurrency market. According to CNBC reports, access, previously limited to certain high-net-worth individuals (those with over $1.5 million in assets and an aggressive risk tolerance), will now be extended to holders of Individual Retirement Accounts (IRAs) and 401(k) plans, offered through Morgan Stanley's approximately 16,000 financial advisors. The potential impact is substantial, as even a fraction of the total U.S. retirement assets—$18 trillion in IRAs and $9.3 trillion in 401(k)s (Source: Investment Company Institute)—flowing into the crypto market could have a major effect. Currently, Morgan Stanley is limiting offerings to Bitcoin funds managed by BlackRock and Fidelity but is monitoring market developments and indicating openness to considering other crypto products. Automated system monitoring will be implemented to prevent excessive risk exposure. From an institutional perspective, this move is significant: 1. The expansion of access to retail investors by a major financial institution further enhances the recognition and credibility of cryptocurrencies as an "asset class," potentially encouraging new capital inflows from segments previously hesitant to invest. 2. Incorporating cryptocurrencies as part of traditional portfolios within long-term savings and investment vehicles like IRAs and 401(k)s could enhance market stability and strengthen the long-term demand base. 3. Morgan Stanley's decision aligns with similar initiatives from other major financial players, including Fidelity (offering crypto in retail retirement accounts), JPMorgan (enabling ETFs as loan collateral), and BlackRock (successful Bitcoin ETF, exploring tokenization), signaling an accelerating convergence of traditional finance and cryptocurrency. As Jeff Feng, Co-founder of Sei Labs, noted, this development further accelerates the trend where "Digital assets are becoming a standard part of diversified portfolios." Regarding Bitcoin's price impact, the increase in new capital from retail investors will directly boost market liquidity and support price appreciation. The inflow of long-term savings capital into the crypto market could absorb short-term volatility, contributing to more stable price discovery. While current offerings are Bitcoin-focused, future expansion to include other major cryptocurrencies like Ethereum is plausible, contributing to the overall market's growth. This news has a greater impact on the medium-to-long-term establishment of Bitcoin's status as an asset class than on immediate market sentiment following events like the tariff announcement-induced sharp decline. ### Traditional Financial Institutions Consider Issuing Stablecoins: G7 Currency-Pegged News that several major banks, including BNP Paribas, Bank of America, Goldman Sachs, Deutsche Bank, and Citi, are exploring the issuance of stablecoins pegged to major G7 currencies such as the USD, EUR, and JPY represents a significant inflection point in the digital currency ecosystem. These banks aim to provide stable settlement assets on public blockchains through "1:1 backed digital money." This move signals that major banks are seriously exploring the potential of blockchain technology and digital assets, seeking to foster market competition while ensuring regulatory compliance and robust risk management by integrating with existing financial infrastructure. In the U.S., the GENIUS Act, which regulates payment stablecoins, has been enacted, although its full implementation requires time. Concerns have also been voiced by the banking industry regarding the potential for interest-bearing stablecoins to threaten financial stability, making close collaboration with regulators essential. While Tether (USDT) currently dominates market share, with USDC and DAI also being key players, the emergence of stablecoins issued by traditional financial institutions could significantly alter the market landscape. From an institutional perspective, this news is important: 1. Stablecoins issued by traditional financial institutions are highly compatible with the existing financial system and operate under regulatory oversight, offering a more trusted environment for utilization. This is likely to spur the adoption of stablecoins and drive capital inflows into Decentralized Finance (DeFi) and other blockchain-based services. 2. The introduction of stablecoins pegged to multiple major currencies could expand the role of digital currencies in global payment systems, potentially streamlining cross-border payments and reducing costs. 3. As Tushar Jain, Co-founder of Multicoin Capital, pointed out, there is potential for bank clients to shift deposits towards higher-yielding stablecoins, which could impact the banking industry's business models. While this signifies increased competition for existing stablecoin issuers like Tether, the entry of new players could attract more users and capital, contributing to overall market expansion. Although the direct impact on Bitcoin's price may be limited, stablecoins function as gateways into the broader crypto ecosystem. Their proliferation and stabilization could serve as an indirect tailwind for major cryptocurrencies, including Bitcoin, by increasing liquidity between fiat and cryptocurrencies and facilitating capital inflows. This could expand Bitcoin's liquidity and market size, forming a foundation for long-term price appreciation. ### Rising Correlation with AI Sector and Bubble Concerns: Correlation with Nvidia The correlation between Bitcoin (BTC) and Nvidia (NVDA) stock prices reaching a one-year high of 0.75 as of Friday, October 10, 2025, has amplified concerns among market participants about the linkage with the AI sector and the potential for an AI bubble. Both assets have moved in tandem, maintaining an upward trend this week, with Bitcoin briefly surging past its previous all-time high above $126,000, and Nvidia's stock price also rising 43.6% year-to-date to a new record high. This high correlation suggests that market participants perceive Bitcoin as a high-beta risk asset, similar to tech growth stocks represented by the AI sector. Some analysts are drawing parallels to the late 1990s dot-com bubble, warning of the risk of a significant price crash, potentially up to 80%, in both the AI sector and the Bitcoin market moving in tandem. The circular flow of capital among AI-related companies (e.g., significant investments between OpenAI, AMD, Oracle, Nvidia, and CoreWeave) is cited as a classic sign of bubble formation, with parallels drawn to Cisco Systems during the dot-com era. Market commentator The Great Martis noted that the dot-com bubble caused the Nasdaq to drop 80%, suggesting a similar scenario could unfold in the AI and crypto markets. In this environment, some investors are adopting a "cushion strategy," following the approach of figures like Warren Buffett by stepping away from AI and tech sectors and investing in cash or traditional blue-chip companies. Adam Khoo also suggested that Bitcoin could be the biggest loser when the AI and crypto booms eventually end. From an institutional investor's perspective, this high correlation with the AI sector and bubble concerns represent critical risk factors for Bitcoin investments: 1. As Bitcoin becomes increasingly viewed as an asset with volatility akin to technology stocks, it becomes more susceptible to macroeconomic fluctuations and tech sector sentiment. This could accelerate outflows from Bitcoin during periods of heightened caution towards risk assets in general. 2. Should the AI bubble burst, the fallout would be widespread, posing a risk of significant price depreciation for Bitcoin. This could cast doubt on the efficacy of including Bitcoin as a hedge asset in portfolio diversification strategies. 3. Conversely, advancements in AI technology itself hold positive long-term implications for the development of blockchain technology and the Web3 ecosystem. For instance, AI-driven data analytics (Article 9) and investments in AI infrastructure (Article 6) could drive efficiencies and create novel use cases. Institutional investors will need to adopt a cautious and strategic investment approach, acknowledging the risks of an AI bubble while considering the long-term synergistic effects between AI and blockchain. Regarding Bitcoin's price impact, heightened sensitivity to the AI sector and bubble burst concerns are likely to exert downward pressure on Bitcoin prices in the short-to-medium term. Nvidia's stock performance may serve as a potential leading indicator for Bitcoin prices, requiring close monitoring by market participants. In the long term, assessing how the evolution of AI technology impacts the blockchain ecosystem will be crucial. ### Overall Summary The recent cryptocurrency market faced a massive liquidation event and deteriorating market sentiment ('Fear'), stemming from U.S.-China trade tensions. However, positive developments such as continued institutional inflows into Bitcoin ETFs and the opening up of access for retail investors by major asset managers are providing support. On the regulatory front, despite uncertainty from the U.S. government shutdown, signs of increasing market maturation and institutionalization are emerging, evidenced by regulatory developments in the EU and UK, and considerations for stablecoin issuance by traditional financial institutions. The rising correlation with the AI sector poses a short-term risk factor. Conversely, projections of expanded institutional digital asset allocations and the complementary nature of blockchain and AI technologies underpin medium-to-long-term growth expectations. These factors are intricately intertwined; while short-term volatility is likely to persist, regulatory clarity and increased institutional involvement are shaping a long-term trend poised to solidify Bitcoin as a major asset class.

The primary downside risks for Bitcoin currently stem from the escalation of the US-China trade war, concerns over a potential AI bubble burst, and regulatory uncertainty due to a possible US government shutdown. However, these risks are likely short-term in nature. Key support levels are the recent low of $110,377 and the psychological level of $100,000. As long as these levels hold, Bitcoin's structural strength will be maintained. While the high correlation with the AI sector warrants attention, this is considered a temporary phenomenon, and positive long-term synergies can be expected.

**Outlook** In the short-term (24-48 hours), a rebound from the oversold RSI condition is anticipated. Buying on dips within the $100,000-$110,000 range is expected to be effective. For the medium-term (1-week timeframe), we predict that continued inflows into ETFs will accelerate the market's upward trend. Developments regarding a potential US government shutdown, along with the performance of the AI sector, particularly Nvidia's stock price, will serve as key catalysts driving significant price movements.

In conclusion, based on our comprehensive analysis, we are confident that the Bitcoin market has navigated its short-term correction and is set to resume its long-term upward trend. The recent large-scale liquidation event, exceeding $20 billion, effectively purged excessive leverage from the market, serving as a crucial 'reset' for healthy price discovery. This event further strengthens our medium-to-long-term bullish outlook. We categorize the current market bias as 'slightly bullish'. The RSI, currently at 18.8, indicates oversold conditions, suggesting readiness for a rebound. Furthermore, the persistent weekly inflows averaging $2.71 billion into US spot Bitcoin ETFs underscore unwavering institutional demand, acting as a significant driver for market stability and price appreciation. The cumulative net inflow figure of $62.8 billion clearly signals Bitcoin's establishment as a major asset class. Morgan Stanley's expansion of cryptocurrency investment offerings to retail clients further enhances Bitcoin's credibility and adoption as an asset class. This opens avenues for long-term savings funds, such as those within IRAs and 401(k)s, to flow into the market, thereby strengthening its long-term foundation. While short-term risks such as escalating US-China trade tensions, concerns over an AI bubble bursting, and regulatory uncertainty stemming from a potential US government shutdown exist, we view these as manageable market noise. The strong negative correlation of -0.62 with the S&P 500 demonstrates Bitcoin's emerging role as a diversified hedge against traditional risk assets, enhancing its significance within investment portfolios. Our specific action plan for investors involves 'buying the dip' within the $100,000 to $110,000 range. These levels represent recent lows and psychological thresholds, acting as strong support. For profit targets, a strategy aiming to surpass $126,000, potentially reaching the $130,000 to $140,000 zone, is advisable. Implement stop-loss orders if the price clearly breaks below $100,000, or set them according to your individual investment strategy. Key price levels to monitor this week are $100,000 (support) and $126,000 (resistance), as the battle at these levels will dictate short-term direction. From a risk management perspective, continuous monitoring of ETF inflows, developments regarding the US government shutdown, and trends in the AI sector, particularly Nvidia's stock performance, is crucial. By focusing on Bitcoin's long-term growth story as an asset class, rather than getting swayed by short-term volatility, investors can position themselves for solid returns and market success.