Bitcoin plunged sharply on October 17, 2025, falling to a low of $103,528 amid mounting worries about credit risks in US regional banks. The market’s reaction was swift, with over $1.2 billion wiped out in crypto liquidations.
Investors grew cautious as auto sector bankruptcies exposed risky bank loans, rattling confidence in financial stocks. This turmoil echoed fears of a wider market sell-off, dragging Bitcoin’s price below key support zones and renewing speculation about how low it may go.
Regional Bank Worries
The pressure on regional banks intensified after two major auto-related bankruptcies: First Brands Group, with $10 billion in liabilities, and Tricolor Holdings, a subprime lender, filed for bankruptcy revealing deep credit risks. Banks exposed to these troubled loans saw their shares plunge dramatically.
Zions Bancorp fell 13% after announcing a $50 million loss, while Western Alliance dropped 11% over fraud allegations linked to its lending portfolio. These banking woes caused the S&P 500 to close down 0.63%, with the Nasdaq and Dow Jones also suffering notable declines. This unease spilled over into crypto markets, intensifying Bitcoin’s downward pressure.
Key Support Tests
Bitcoin’s drop below the 200-day simple moving average at around $107,500 raised alarm among traders. The cryptocurrency broke important psychological barriers, slipping to as low as $104,000. Analysts pointed to $88,000 as the next major support level if current floors fail.
Many expect Bitcoin to sweep liquidity between $103,500 and $105,000 before finding a stable bottom. Despite the sharp selloff, the crypto Fear & Greed Index remained at extremely low levels, signaling investor panic but also a potential rebound opportunity. Traders warned patience is crucial to avoid losses from trying to catch a falling knife.
Short-Term Fears, Long-Term Hope
Short-term outlook remains uncertain, with over $5 billion in leveraged liquidations rattling the market in mere hours. Market sentiment is bearish due to regional bank credit fears and ongoing US-China trade tensions, which add inflation concerns and equity jitters.
However, Federal Reserve hints at easing and potential liquidity injections offer hope for recovery. Experts see a 60% chance Bitcoin will test the $100,000 mark, but rebounding higher depends on stabilizing financial conditions.
Looking further ahead, Bitcoin’s scarcity and rising adoption suggest it remains a strong hedge against systemic risks in traditional banking. For now, cautious investors are advised to watch support levels closely and stay prepared for volatility.
Written By Fazal Ul Vahab C H