Bitcoin prices fell on Tuesday, sharply reversing their limited weekend gains, as cryptocurrencies underperformed compared to other high-risk assets that benefited from easing trade tensions between the United States and China.

Bitcoin, the world’s largest digital currency, led the losses across the crypto market even as global risk appetite improved, supported by political developments in Japan and expectations of renewed US–China trade talks.

Bitcoin dropped about 3% to $107,712.3 by 01:43 a.m. Eastern Time (05:43 GMT).

Recovery Momentum Fades as “Uptober” Rally Dissolves

Bitcoin struggled to stay above the $110,000 level this week after suffering a flash crash earlier in October that dragged it down from record highs and wiped out roughly $500 billion in total crypto market capitalization.

Analysts noted that the October crash reinforced a sense of caution and risk aversion in the digital asset space, as traders have become reluctant to place large bets amid heightened volatility.

The optimism surrounding the so-called “Uptober” — a seasonal trend in which cryptocurrencies typically outperform in October — has also faded quickly, with Bitcoin now down more than 2% since the start of the month.

In a research note, Forex.com analysts wrote: “So far, October has not unfolded the way bullish Bitcoin traders expected. Instead of the usual seasonal strength, performance has been muted, and the early rally reversed sharply mid-month — a move that may not be over yet.”

They also pointed out that Bitcoin has increasingly decoupled from traditional financial markets, particularly equities, as cryptocurrencies have retreated even while Wall Street indices hit a series of record highs in recent weeks.

“Bitcoin is clearly lagging in an environment where most risk assets are posting strong gains,” the analysts said.

Altcoins Slide as Ripple Fails to Benefit from Corporate News

The broader crypto market also came under renewed pressure on Tuesday, with most altcoins following Bitcoin lower after a brief recovery.

Ether (ETH), the world’s second-largest cryptocurrency, fell 5.3% to $3,859.65 after failing to hold the key psychological level of $4,000.

Ripple (XRP) also declined 2.2% to $2.4145, showing little reaction to reports that Ripple Labs plans to establish a new corporate treasury backed by the issuer itself.

During the Asian session, cryptocurrencies extended their declines even as Asian stock markets surged to record highs — led by Japan’s Nikkei following conservative candidate Sanae Takaichi’s advance toward becoming prime minister, and by Chinese markets rallying after conciliatory remarks from Washington over ongoing trade tensions.

Oil prices rose on Tuesday after falling in the previous session, as traders tried to balance concerns about oversupply in global markets with escalating trade tensions between the United States and China, the world’s two largest oil consumers.

Brent crude futures climbed by 52 cents, or 0.84%, to $61.52 per barrel by 10:19 GMT. US West Texas Intermediate (WTI) crude for November delivery — due to expire on Tuesday — rose by 53 cents, or 0.9%, to $58.05, while the more active December contract gained 52 cents, or 0.9%, to $57.54 per barrel.

Prices had fallen on Monday to their lowest levels since early May amid worries about oversupply and slowing economic growth due to the latest escalation in the US–China trade conflict.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said: “Speculative bets on lower prices are likely to persist as long as Brent remains below the $65-per-barrel level.”

Structural Market Shift Reflects Supply Abundance

Both Brent and WTI have shifted into a market structure known as “contango,” where spot prices are lower than forward prices — typically a signal of plentiful supply and weak near-term demand.

In the physical market, sales of crude cargoes have declined, and discounts have widened across West African crude grades amid expectations of a significant surplus, said Yaniv Shah, Vice President of Oil Markets at Rystad Energy.

He added that oil prices have been under pressure since late last month as OPEC and its allies, including Russia (OPEC+), continued with plans to add more supply to the market. Analysts now expect a surplus this year and next, with the International Energy Agency (IEA) forecasting a global oversupply of nearly 4 million barrels per day by 2026.

Caution Over Oversupply Fears

Some analysts, however, believe concerns about a glut may be exaggerated for now.

Giovanni Staunovo, analyst at UBS, said in a research note that if the IEA’s forecast of a massive surplus were accurate, the oil futures curve would show a much steeper “super-contango” pattern — something not yet reflected in the market.

Meanwhile, a preliminary Reuters survey on Monday indicated that US crude inventories likely rose last week ahead of reports from the American Petroleum Institute (API) and the US Energy Information Administration (EIA).

During the week ending October 10, crude stockpiles rose more than expected, while gasoline and distillate inventories fell by a greater margin.

Olle Svalby, analyst at SEB Bank, said: “We’re not in an actual glut crisis. Distillate inventories have recently declined, and while geopolitical developments could spark short-term volatility, the overall trend remains bearish unless OPEC+ slows its output growth or macroeconomic conditions improve unexpectedly.”

Hopes Pinned on US–China Talks

Analysts noted that a broader trade agreement between the United States and China could provide support or at least a floor for prices.

Investors are now looking ahead to next week’s meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, though disputes over tariffs, technology, and market access remain unresolved.

Gold is having an exceptional year in 2025, rising more than 60% since the start of the year — marking one of the strongest bull runs in the precious metal’s history — driven by a mix of geopolitical tensions, shifting central bank policies, and surging global demand for safe-haven assets.

If this momentum continues through December, it will be gold’s best annual performance since 1979, when prices soared more than 120% amid the global energy crisis and skyrocketing inflation in the United States.

Since the beginning of this year, the precious metal has repeatedly broken record highs, surpassing the psychological barriers of $3,000 and $4,000 per ounce for the first time in history.

Bull Market

This year’s gold bull market is fueled by several interlinked factors, most notably the unexpected political and economic shifts in major global economies.

The sharp escalation in trade tensions between the United States and China, along with growing expectations of US interest rate cuts in the coming months after a prolonged period of monetary tightening, have also played a key role.

Strong central bank buying — particularly from China, India, and Turkey — has further boosted global demand for gold as a hedge against currency risks and sovereign debt.

US Dollar Weakness

The decline of the US dollar from multi-year highs has been one of the main drivers behind gold’s surge, as investors seek to diversify their portfolios away from dollar-denominated assets.

At the same time, several Federal Reserve officials have hinted at a potential shift toward looser monetary policy by the end of the year, lowering US bond yields and restoring gold’s appeal as a preferred investment.

Geopolitical Tensions

Recent geopolitical developments in the Middle East and Eastern Europe have also fueled demand for gold as a safe haven.

Every escalation in conflict or political uncertainty drives investors toward stable assets that preserve value during turmoil — and gold remains the top choice in such times.

Bullish Forecasts

• Suki Cooper, Head of Metals Research at Standard Chartered Bank, said: “We expect gold to average $4,488 in 2026, with additional upside risks stemming from broader structural factors supporting the market.”

• HSBC raised its average gold price forecast for 2025 by $100 to $3,455 per ounce and projected that prices could reach $5,000 per ounce in 2026.

• Analysts at Bank of America and Société Générale now also expect gold to hit $5,000 per ounce in 2026.

• Goldman Sachs lifted its December 2026 gold forecast to $4,900 per ounce from $4,300, citing strong inflows from Western exchange-traded funds and sustained central bank purchases.

The US dollar rose against most major currencies during Tuesday’s trading, while the Japanese yen fell to a six-day low following the election of hardline conservative Sanae Takaichi as Japan’s first female prime minister. Traders are betting that her government could bring policy uncertainty and increased fiscal spending.

Takaichi, leader of the ruling Liberal Democratic Party, won Tuesday’s parliamentary vote to select the new prime minister — a development widely anticipated by investors after she secured support from the right-wing opposition party Ishin.

The yen fell 0.25% to ¥151.35 per dollar after touching ¥151.61, its weakest level since October 15. The currency also declined against both the euro and the British pound.

Hirofumi Suzuki, Chief FX Strategist at SMBC, said, “A fiscal stimulus package is expected, but it will likely be modest due to the difficulty of policy coordination.”

He added, “A sharp yen decline will probably be avoided, though mild downward pressure on the currency is likely to persist.”

Earlier on Tuesday, local media reported that Takaichi finalized plans to appoint former Regional Revitalization Minister Satsuki Katayama as finance minister.

In a Reuters interview last March, Katayama expressed a preference for a stronger yen — a stance that could prompt markets to reconsider further yen depreciation.

Still, Takaichi’s support for fiscal stimulus and monetary easing leaves investors cautious and complicates the Bank of Japan’s path toward rate hikes.

Frederic Neumann, Chief Asia Economist at HSBC, said, “From a political perspective, there may be a case to delay monetary tightening until the impact of fiscal easing becomes visible. This places the Bank of Japan in a very challenging position.”

Dollar Strengthened by Weak Yen and Improved Global Sentiment

Across broader markets, currencies traded within narrow ranges despite a generally upbeat mood after comments from US President Donald Trump on Monday, in which he said he expects to reach a trade deal with Chinese President Xi Jinping.

White House economic adviser Kevin Hassett also said the partial US government shutdown — now in its 20th day — is likely to end this week.

Concerns over credit risks in US regional banks eased slightly, helping to support risk sentiment.

The US Dollar Index, which measures the greenback’s performance against a basket of six major currencies, climbed to a six-day high, supported by yen weakness, rising 0.2% to 98.787.

Meanwhile, the euro slipped 0.15% against the dollar to $1.1623, gaining little from easing political uncertainty in France.