Bitcoin Slumps as Risk Appetite Fades Across Crypto Markets

Bitcoin has extended its decline following a sharp market shock in October, while traditional safe-haven assets continue to climb. Data from on-chain analytics and price movements suggest investors are withdrawing funds from crypto and shifting toward assets seen as more stable during periods of uncertainty. A falling stablecoin supply has added to concerns that a broader market recovery may take longer to materialize.

Bitcoin Loses Momentum, Stablecoin Decline Signals Capital Exit

Bitcoin is now down nearly 30% from levels seen before the October crash. At the same time, gold and silver have surged to record highs, signaling a clear shift in investor behavior. According to crypto analytics firm Santiment, this rotation reflects growing caution across global markets.

Over the past 10 days, total stablecoin market capitalization has declined by $2.24 billion. Santiment explained that this drop suggests capital is leaving the crypto ecosystem rather than remaining on the sidelines to buy dips. Much of that money appears to be flowing into gold and silver, both of which are widely viewed as stores of value during periods of economic stress.

“A falling stablecoin market cap shows that many investors are cashing out to fiat instead of preparing to buy dips,” Santiment said. The firm added that rising demand for precious metals points to investors choosing safety over risk as uncertainty increases.

Bitcoin had been performing strongly through much of 2025 before conditions changed abruptly on Oct. 10. On that day, more than $19 billion in leveraged crypto positions were wiped out, sending Bitcoin sharply lower—from around $121,500 to below $103,000—within hours. Since then, losses have deepened, with Bitcoin recently trading near $88,000.

Gold and silver have moved in the opposite direction. Gold prices have climbed more than 20% since October, breaking above the $5,000 level, while silver has more than doubled in market value. 

Altcoins at Risk as Capital Exits and Liquidity Tightens

Demand has also come from within the crypto industry itself. Stablecoin issuer Tether purchased 27 metric tons of gold, valued at about $4.4 billion, during the fourth quarter of 2025, reinforcing the shift toward hard assets.

Current market conditions reflect several key trends:

• Stablecoin supply is shrinking, signaling reduced liquidity across crypto markets.
• Capital rotation favors gold and silver over digital assets.
• Bitcoin is showing weaker momentum compared with earlier cycles.
• Altcoins face steeper pressure due to lower risk appetite.
• Investor focus has shifted to macroeconomic events and policy signals.

Santiment said past market cycles show that sustained crypto recoveries usually begin only after stablecoin market capitalizations stop falling and start to rise. A growing stablecoin supply often points to fresh capital entering the ecosystem and improving investor confidence. Until that happens, riskier assets are likely to lag.

Bitcoin Holds Near $88K as Traders Await Fed Decision

Bitcoin has historically held up better than altcoins during periods of stress, but reduced liquidity still limits upside across the market. Smaller tokens tend to see sharper drawdowns when capital exits, while Bitcoin often trades sideways rather than rebounding quickly.

On Tuesday, Bitcoin edged higher but remained below $90,000. Price action stayed near one-month lows as traders remained cautious ahead of the U.S. central bank’s policy decision. 

At the time of writing, the firstborn coin is trading at $88,497, up 0.56% over the past 24 hours. Market sentiment remains bearish, with the Fear and Greed Index at 29, indicating fear. The price also continues to trade below the 200-day simple moving average, with only 13 positive days in the past month.

So far in 2026, Bitcoin has gained just 1%, lagging behind other major assets despite a weaker U.S. dollar. Market attention is now firmly on the upcoming Federal Reserve meeting, where interest rates are widely expected to remain unchanged, keeping risk appetite subdued in the near term.