Bitcoin Freefall After October 10: Why Investors Are Choosing Gold Over Crypto

When the crypto market experienced pressure over the past few weeks, an intriguing phenomenon emerged from blockchain analytics data. According to Santiment, a significant decline in the stablecoin market actually indicates a much deeper investor reallocation strategy — they are not waiting to buy the dip, but are fully shifting into traditional stores of value like gold and silver. This capital shift is not just tactical fluctuation, but a strong signal of changing market sentiment following the October 10 event.

What Happened on October 10? The Turning Point of the Crypto Market

October 10 became an unforgettable moment for the modern crypto market. On that day — which fell on a Thursday — a massive deleveraging crisis hit the ecosystem. Over $19 billion in leveraged crypto positions were liquidated in a single, severe trading session. Bitcoin, which had previously hovered around $121,500, sharply corrected past $103,000 in a short period. This was not just ordinary volatility; it was one of the largest margin wipeouts in the current market cycle.

The impact of that flash crash continues to resonate. From the pre-crash peak to now, Bitcoin has further declined to around $71,450 — representing a nearly 41% loss from its high. This ongoing pressure has created market trauma, making investors think twice before taking high-risk positions.

Total Stablecoins Out of the Ecosystem: A Signal of Panic

Santiment identified that over the 10 days since the market shock, total stablecoin capitalization decreased by $2.24 billion. This figure tells a clear story: investors are not just holding back from buying, they are actively converting digital assets back into fiat currency. “The decline in stablecoin market cap indicates liquidity is flowing out of the ecosystem, not available for buying at lower prices,” the analytics firm stated in its official release.

Contrasting with crypto exchange responses, demand for gold and silver shows a dramatic rebound. Gold has appreciated over 20% since October, surpassing and exceeding the $5,000 per troy ounce level. Silver, often a marginalized subject, is even more impressive — its value doubled in the same period. This reflects the fundamental principle of crisis investing: when uncertainty rises, capital flows into proven stores of value, not into markets known for volatility.

Why Precious Metals Outperform Bitcoin in the Capital Race?

Global macroeconomic uncertainty continues to pressure risk assets. Turbulent geopolitics, rising government bond yields, and confusion over the direction of global monetary policy create an environment unfavorable for digital asset holders. In scenarios like this, gold and silver — which have served as hedges for centuries — naturally attract capital flows.

Santiment emphasizes that “when uncertainty increases, money often flows into assets considered as stores of value during economic stress, rather than into markets known for volatility like crypto.” This statement captures the essence of the ongoing fund shift. Despite its evolving store-of-value status, Bitcoin is still perceived as a risky asset in a heavy macro climate.

Tether Makes a Strategic Pivot: Massive Gold Accumulation

The rotation toward precious metals is not limited to retail and traditional institutional investors. Even key players within the crypto ecosystem are following this pattern. Leading stablecoin issuer Tether emerged as a significant institutional gold buyer toward the end of last year. Data shows that Tether acquired 27 metric tons of gold in the fourth quarter alone, with a purchase value of around $4.4 billion.

This strategy was not a hasty decision. Large-scale gold purchases reflect a deep recognition that hard assets — especially precious metals — offer the stability sought by platforms and investors amid market turbulence. Tether, as an entity bridging the crypto and traditional markets, is choosing to reduce pure crypto exposure and increase backing with more conservative assets.

When Will the Crypto Recovery Begin? Santiment Offers Clues

Although current market outlooks are bleak, Santiment provides a historical framework for recovery. According to the firm’s analysis, a meaningful crypto market recovery historically only begins after one thing happens: stablecoin supply starts to grow again. “A strong recovery usually occurs when stablecoin market cap stops falling and begins to rise,” Santiment asserts. “That signals new capital entering the ecosystem and renewed investor confidence.”

The current condition is actually the opposite. With stablecoin liquidity continuing to shrink, risk appetite across the market remains suppressed. Altcoins, which rely on stablecoin liquidity for trading, face disproportionate pressure. Bitcoin itself, although relatively more resilient than altcoins in such environments, remains hindered by limited capital availability. “Bitcoin often fares better than altcoins in this scenario,” Santiment adds, “but the shrinking stablecoin supply still limits the potential for gains across the crypto market.”

Therefore, the path to recovery from the free fall after October 10 will heavily depend on whether investors show enough confidence to start reallocating capital back into the digital ecosystem. Until then, the crypto market will remain shadowed by the striking events of that Thursday.