- •Global crypto liquidity drop triggers Bitcoin and altcoin price decline.
- •Experts see potential for a bullish recovery.
- •Institutional outflows and derivatives liquidations are key causes.
A sharp decline in global crypto market liquidity in late September 2025, primarily driven by institutional outflows and derivatives liquidations, affected major cryptocurrencies including Bitcoin and altcoins.
The liquidity drop, historically seen as a potential bullish signal, has sparked debate among market leaders about longer-term price recovery and immediate impacts on crypto trading dynamics.
Late September 2025 saw a significant drop in global crypto market liquidity leading to accelerated declines in Bitcoin and major altcoins.
The decline, driven by institutional outflows and thin order books, is viewed as a precursor to potential longer-term price recovery by market experts.
Institutional Outflows Propel Crypto Price Downturn
A late September drop in global liquidity led to sharp declines in crypto prices. This event involved institutional investors, ETF providers, and crypto exchanges, highlighting the interconnected nature of modern markets. Institutional outflows accounted for a notable percentage of market movements. Meanwhile, exchanges, both centralized and decentralized, experienced heightened volumes and significant liquidations in derivatives markets.
$150 Billion Bitcoin Loss Spurs Weak Sentiment
The liquidity crunch wiped out substantial market value, with over $150 billion lost in Bitcoin alone. This drop affected market sentiments and spurred discussions on potential recovery opportunities. Financial implications include decreased confidence in ETF inflows and stress in altcoin markets. Experts suggest these conditions could set the stage for a future bullish recovery, as weak positions are flushed out. Raoul Pal, CEO of Real Vision, remarked:
“Volatility shakes out the weak hands, resets leverage, and creates the floor for exponential moves. The global liquidity cycle remains the dominant macro force.”
Liquidation Spirals: A Prelude to Market Rebound?
Past events, like the 2020 pandemic crash, show similar liquidation spirals led to eventual recovery. Such patterns, identified by figures like Ben Kurland, suggest cleansing phases prepare markets for growth. Ben Kurland, CEO of DYOR, noted:
“Once the first wave of liquidations started, algos and funding pressures turned it into a feedback loop. In crypto, conviction is high but liquidity is thin — which is why moves down feel like free falls, while recoveries grind back more slowly. This was less about fundamentals collapsing and more about the system cleansing excess risk.”
Data indicates liquidations may serve as a foundation for a bullish cycle. Analysts draw parallels to historical trends, suggesting the current market phase could mirror past recoveries, barring external shocks.