Crypto’s Dramatic Fall as $1.2 Trillion Lost in Weeks
Following a prolonged winter that the cryptocurrency market has faced, it recently appeared to be gearing up for a comeback, yet it now seems ready for another significant shift. In just a few weeks, trillions of dollars in value have been erased from the crypto market, undoing a significant portion of the hard-fought gains that had previously boosted investor sentiment earlier this year. Bitcoin, which captured the attention of many during its recent surge to an all-time high of $126,000 and sparked renewed optimism for a prolonged bull market, has now pulled back to around $90,000. This decline has not only affected Bitcoin but has also led to a significant downturn in the broader market, resulting in one of the most pronounced sell-offs the digital asset space has experienced in years. In the last six weeks, the global cryptocurrency market has experienced a significant downturn, losing approximately 25% of its value and erasing around $1.2 trillion from the overall market capitalisation of all digital assets. The total market capitalisation of cryptocurrencies decreased from approximately $4.4 trillion in early October to just over $3.15 trillion by mid-November.
Bitcoin experienced a significant drop from its early October high of over $126,000, trading near $90,000 by mid-November, marking a decline of approximately 25–30 percent from that peak. The downturn wiped out nearly all of crypto’s advancements for 2025, driving numerous other tokens further into the red. Moreover, it’s not only Bitcoin that is experiencing the impact of the wipeout. Ethereum has experienced a significant downturn, with November reports indicating a drop of up to 12 percent in a single session, bringing it down to approximately $3,166, while it was trading around $3,000 on Wednesday. In the last month, Ether has seen a decline of almost 21 percent in its value. Meanwhile, Solana has found itself among the most impacted. The cryptocurrency experienced a decline of 26 per cent, trading at $139 after reaching a peak of $200 just weeks prior. This drop has intensified the struggles for leveraged long positions and shaken confidence in the more speculative areas of the crypto market. On October 10, a pivotal moment in the crypto landscape emerged when US President Donald Trump announced a staggering 100 per cent tariffs on Chinese imports. This unexpected declaration has been identified by numerous market experts as the catalyst for the subsequent crypto meltdown. In a matter of hours following his announcement, over $19 billion in leveraged crypto positions faced liquidation.
In a notable shift, investors began withdrawing significant amounts from spot Bitcoin exchange-traded funds, highlighted by a reported single-day outflow of approximately $870 million in mid-November, as per report. Market participants are increasingly signaling diminishing hopes that the US Federal Reserve will implement interest rate cuts in the near future. Experts indicated that typically, when rate-cut expectations start to diminish, investors often shift away from high-volatility assets like cryptocurrencies and gravitate towards more secure instruments. The prevailing risk aversion aligned with a downturn in high-growth tech stocks, intensifying outflows from the more speculative areas of the market. A report indicated that a significant portion of the price movement was influenced by leveraged positions in futures and margin trading. In instances of sharp price movements, leveraged positions face automatic closures, which intensifies selling pressure and creates feedback loops. As a result, billions of dollars in cryptocurrencies faced liquidations across various exchanges in a rapid timeframe. The recent sell-off aligns with declines in specific equity sectors, particularly speculative technology, including AI, prompting investors to seek refuge in safer assets. Although traditional finance firms have yet to report any systemic strain directly linked to crypto, this episode illustrates how shifts in sentiment within one market can resonate more widely across others. In the meantime, report says that the introduction of significant institutional products, particularly spot Bitcoin ETFs, has transformed the market’s infrastructure. In the earlier part of the year, inflows significantly contributed to the rally. However, during the sell-off, substantial and concentrated redemptions from these vehicles compelled ETF providers to sell or rebalance their holdings, thereby increasing supply in already pressured markets.
Ashish Singhal stated, “Bitcoin fell below $90,000 for the first time in seven months, influenced by factors such as uncertainty around potential US interest rate cuts, broader negative equity market sentiment, and large holders reducing their positions.” While some point to a death cross, similar patterns in the past have also preceded recoveries. “Overall, the movement reflects a period of short-term volatility across markets. For some participants, the pullback may also be viewed as an opportunity to accumulate at lower levels,” he added. As is often the case in a declining market, retail investors are positioned to bear the brunt of the losses. This time around, retail and leveraged traders faced swift losses due to forced liquidations. In the latest developments, institutional holders, such as corporate treasuries and ETF investors, experienced significant markdowns in their portfolio value as Bitcoin and major altcoins declined, as per reports. A source cautioned that the ETF redemptions and other product outflows have eliminated a crucial source of buying that had previously supported prices earlier this year.
Continued net outflows may maintain elevated selling pressure and hinder any sustainable recovery. Episodes of sharp fluctuation like this one typically prompt renewed regulatory scrutiny and demands for enhanced market safeguards, including liquidity measures, improved disclosure, and stronger custody practices, according to the Financial Times, referencing insights from crypto market analysts. Multiple jurisdictions have indicated a heightened focus on derivatives, retail leverage, and the resilience of exchanges following the recent market volatility. According to a market assessment, “BTC, after a period of consolidation, dropped below $100K but has since seen a partial recovery and stabilised in the $94K–$95K range.” The recent pullback can be attributed to long-term holders cashing in on their profits, a slowdown in ETF inflows, and a backdrop of temporary macroeconomic uncertainty. As the US shutdown hampers the release of crucial economic data and casts doubt on potential rate cuts, investors are exercising caution… Until a definitive macro catalyst or new institutional inflows materialize, Bitcoin is likely to remain in a sideways trend. “Traders should manage risk and wait for confirmed signals before taking new positions.”
