Wall Street Backed Bitcoin, Then Watched It Crash 50%, Two Reports Explain

BlackRock and VanEck released back-to-back reports this week explaining why Wall Street's arrival failed to prevent the 50% Bitcoin (BTC) crash. Both firms argue the same infrastructure that accelerated institutional adoption also amplified the sell-off.

BlackRock's whitepaper blames extreme leverage and capital rotation into AI funds. VanEck's latest ChainCheck counts 8 of 12 capitulation signals firing and suggests the correction may be entering its final months.

Leverage and Fund Flows Drove the Bitcoin Crash

BlackRock's "Re-Underwriting Bitcoin" whitepaper describes a market that entered October 2025 dangerously stretched. Futures open interest topped $90 billion, and 80% of it sat in offshore perpetual contracts offering up to 125x leverage.

When Washington announced fresh China tariffs on October 10, forced liquidations wiped $20 billion of open interest in a single day. Equities recovered within weeks, but bitcoin kept sliding and broke below $60,000 by June.

Fund flows deepened the damage. Spot Bitcoin ETFs drew $60 billion between January 2024 and October 2025. They then bled more than $5 billion while AI-themed funds absorbed $46 billion.

BlackRock, however, frames the rotation as cyclical rather than a structural loss of demand.