Bitcoin’s First Red October in Seven Years: Trump–Xi Trade War Hits Crypto Markets
This week’s market narrative was dominated not by the Federal Reserve or inflation data, but by geopolitics. The meeting between U.S. President Donald Trump and Chinese leader Xi Jinping at the APEC Summit in Gyeongju sent shockwaves through global markets — and Bitcoin was no exception. For the first time in seven years, October ended in the red, erasing the myth of the so-called “Uptober.”
Geopolitics eclipses monetary policy
Historically, crypto markets have responded most strongly to interest-rate changes and monetary policy signals. This time, however, that relationship broke down. On October 29, the Federal Reserve cut rates by 0.25 percent and formally ended quantitative tightening. In previous cycles, such dovish policy would have triggered a Bitcoin rally. Instead, BTC slid below $108 000 — a clear sign that traders were focused elsewhere.
The elsewhere was Beijing and Washington. The Trump–Xi negotiations over renewed import tariffs created fresh uncertainty around the semiconductor and mining-equipment sectors, both critical to Bitcoin’s supply chain. Analysts at QCP Capital noted bluntly: “The tariff meeting matters more than the Fed right now.”
When the world’s two largest economies spar over trade, even decentralized assets react. On October 10, Bitcoin plunged from $121 560 to $103 000 within hours — a 17 percent intraday swing directly tied to news of potential export restrictions on Chinese-made mining rigs.
Mining and the return of supply-chain risk
Roughly 70 percent of specialized ASIC hardware used by North-American mining farms still originates in Asia. New tariff proposals, including a 25 percent surcharge on high-efficiency chips, immediately pressured U.S. operators’ profit margins. Several public miners, including CleanSpark and Marathon Digital, saw share prices drop between 8 and 12 percent during the same week.
For the first time since 2021, discussions about “mining nationalism” resurfaced in Washington policy circles. Analysts warn that if trade barriers persist, capital expenditure for new data-center infrastructure could decline sharply in 2026, delaying the next wave of hashrate expansion.
ETF flows turn red as investors rotate capital
The macro anxiety quickly spilled into institutional investment vehicles. On October 30, Bitcoin ETFs recorded $470 million in daily outflows — the steepest single-day withdrawal on record. The largest losses came from Fidelity ($164 million) and ARK Invest ($143 million), signaling widespread short-term risk aversion.
In contrast, alternative crypto funds are enjoying a mini-renaissance. Solana ETFs registered four consecutive days of inflows, adding $44.48 million on October 31 and pushing total assets above $502 million. Bitwise’s new staking ETF attracted $69.5 million on its first trading day — evidence that investors are actively reallocating rather than retreating.
This capital rotation, often described as a “search for narrative,” reflects growing skepticism toward Bitcoin’s short-term leadership role. As volatility compresses and ETF volumes surge in alternative assets, traders are diversifying exposure to chase relative momentum.
Volatility signals near-term turbulence
Technical indicators confirm the brewing storm. The Bollinger Bands Index for BTC has contracted to its narrowest range since 2020, historically a prelude to explosive price swings. Options markets show rising implied volatility in November contracts, suggesting traders expect major directional movement following the U.S.–China talks.
QCP Capital analysts forecast a potential breakout range between $98 000 and $118 000, depending on how tariffs and supply-chain policies evolve in the coming weeks. The firm emphasized that macro sentiment, not monetary easing, will dictate crypto performance through year-end.
The Fed’s fading influence on digital assets
For much of Bitcoin’s history, interest-rate policy has served as a reliable compass for market direction. Yet 2025 marks a turning point. Despite lower borrowing costs and renewed liquidity, institutional investors appear less responsive to the Fed’s moves. Instead, they are pricing geopolitical risk — a domain previously considered outside crypto’s core logic.
This decoupling mirrors the asset’s maturation. As Bitcoin becomes integrated into regulated instruments such as ETFs and structured funds, it inevitably inherits traditional market sensitivities. Tariffs, elections, and trade alliances now sway BTC almost as much as macro liquidity does.
Solana and the rise of alternative narratives
Solana’s sustained inflows contrast sharply with Bitcoin’s defensive tone. Over the past month, Solana’s market capitalization surpassed $90 billion, fueled by institutional demand and growing adoption in tokenized assets and DeFi.
According to Farside Investors, cumulative Solana inflows since early October reached $199.2 million, with Bitwise’s BSOL ETF accounting for nearly half. The data suggests that institutional portfolios are no longer treating alternative Layer-1 tokens as speculative side bets, but as strategic complements to Bitcoin’s macro narrative.
Meanwhile, Ethereum ETFs remained flat, reflecting uncertainty over the network’s fee dynamics and upcoming Dencun upgrade. The capital shift toward Solana may persist as long as Bitcoin trades sideways and macro headlines dominate investor psychology.
A wider lens: Trump’s trade doctrine and the crypto market
The Trump administration’s renewed tariff agenda aims to pressure Chinese exports in electronics, automotive parts, and semiconductors — all indirectly linked to crypto infrastructure. While intended to protect U.S. manufacturing, the policy risks destabilizing global supply chains already stretched by post-pandemic logistics.
Economists warn that if Beijing retaliates with counter-tariffs or yuan devaluation, global risk assets — including Bitcoin — could face another liquidity squeeze. For now, markets remain cautious but not panicked. The next APEC session, scheduled for mid-November, will likely determine whether “Red October” extends into a “Volatile November.”
Investor psychology: fear without panic
Despite ETF outflows, on-chain metrics show no signs of capitulation. Exchange reserves remain near yearly lows, and long-term holder supply continues to rise. This suggests that retail investors are largely inactive while institutional desks rebalance positions.
Funding rates on major derivatives exchanges also normalized after the October 10 sell-off, indicating that the market views the drawdown as macro-driven rather than structural. The absence of forced liquidations reinforces the idea that Bitcoin’s decline is a correction within an ongoing accumulation phase, not the start of a bear market.
Conclusion
October 2025 will be remembered as the month geopolitics overtook monetary policy in shaping digital-asset sentiment. The first “red October” in seven years underscores Bitcoin’s growing entanglement with global trade and political power plays.
As Trump and Xi navigate the next round of tariff negotiations, investors are watching not the Fed’s dot plot, but the diplomatic chessboard. The emerging narrative is clear: crypto markets have matured into a mirror of the global economy — reacting not just to money supply, but to the forces that define the world order itself.
Editorial Team — CoinBotLab