BlackRock and VanEck pin Bitcoin crash on leverage and AI fund rotation
New reports from two major asset managers attribute the 50% decline in Bitcoin to extreme leverage and capital shifting towards artificial intelligence, while suggesting the current correction may be nearing its end.
BlackRock and VanEck have released separate reports explaining the 50% drop in Bitcoin prices, identifying extreme leverage and capital rotation into artificial intelligence funds as the primary drivers of the sell-off. Both firms argue that the same infrastructure which accelerated institutional adoption also amplified the recent market decline.
BlackRock’s whitepaper, titled "Re-Underwriting Bitcoin," describes a market that entered October 2025 in a dangerously stretched state. Futures open interest had topped $90 billion, with 80% of that volume sitting in offshore perpetual contracts offering up to 125x leverage. When Washington announced fresh China tariffs on 10 October, forced liquidations wiped out $20 billion of open interest in a single day.
While equities recovered within weeks, Bitcoin continued to slide, breaking below $60,000 by June. Fund flows further deepened the damage, as spot Bitcoin ETFs, which had drawn $60 billion between January 2024 and October 2025, subsequently saw more than $5 billion in outflows. During the same period, AI-themed funds absorbed $46 billion. BlackRock frames this rotation as cyclical rather than a structural loss of demand.
VanEck’s mid-August ChainCheck report reaches a similar verdict through on-chain data, noting that eight of 12 capitulation signals are currently active. The drawdown has entered its 10th month, which aligns with the historical average duration of 11 to 13 months for such corrections. This timeline mirrors analyst Benjamin Cowen’s call for an October cycle bottom.
The VanEck research team, led by Head of Digital Assets Research Matthew Sigel, expects a shallower trough than the 78% to 94% wipeouts seen in past cycles, citing the absence of a major lender collapse. "We expect a shallower trough this cycle, and we would rather state that assumption plainly than hide it inside a threshold," the report stated.
Despite on-chain researchers arguing the market has entered an accumulation zone, neither firm promises a quick rebound. BlackRock continues to model a 1% to 2% allocation to improve a 60/40 portfolio, while VanEck notes that capitulation buys have historically paid off only at the one-year mark. The coming months will test whether Wall Street’s entry into the Bitcoin market can soften the bottom it could not prevent.
