The global cryptocurrency market has lost more than $1 trillion in just six weeks, one of the sharpest declines since October.
Analysts say the decline is not due to weak fundamentals, but to heavy leverage and large withdrawals by institutional investors.
Cryptocurrency market capitalization is currently about 10% below levels recorded since then. $19 billion liquidation event This decline occurred despite the lack of major negative news or regulatory rollbacks.
Political comments also tend to be positive. For example, just a few days ago, US President Donald Trump said: He wants the US to become “number one in cryptocurrencies.”
Despite this, Bitcoin is still down 25% over the past month, showing a clear disconnect between sentiment and price performance.
Analysts identify structural issues behind decline
a research notes According to Kobeishi Letter, this decline is due to structural pressures rather than weakening fundamentals. The economic downturn began in mid-October, with institutional investors withdrawing money from major crypto funds.
According to CoinShares data, there were $1.2 billion in outflows in the first week of November alone. These outflows hit the market at a time when leverage was already extremely high.
Weekly Crypto Leaks
Excessive leverage causes repeated liquidations
Leverage remains a feature of the crypto market. Cryptocurrency traders often use leverage of 20x, 50x, or 100x. Therefore, even a 2% price change could force you to liquidate. This causes many traders to exit their positions at the same time, creating a chain reaction.
On October 10th, the forced selloff reached $19.2 billion, creating Bitcoin's first daily candlestick of $20,000. Volatility has remained elevated since then.
In addition, there are three separate records recorded in the market. Clearing days exceeding $1 billion In the last 16 days. In fact, more than $500 million is routinely liquidated each day, especially when trading volumes are low.
Daily clearing in the cryptocurrency market
When fear takes root, emotions worsen.
The Cryptocurrency Fear and Greed Index has dropped to 10, a level labeled “extreme fear.” This is comparable to the low recorded in February 2025, even though Bitcoin is still up 25% from its April lows.
Analysts say leverage amplifies swings in sentiment among traders, making sentiment more volatile and prone to sudden reversals.
Bitcoin and Gold Break from Usual Pattern
In addition, Kobeissi Letter Bitcoin And gold. Since the liquidation wave on October 10th, gold It outperformed Bitcoin by 25 percentage points in one month. This marks a clear break from previous trends where both assets rose together amid strong capital inflows.
The pain extends beyond Bitcoin. Ethereum It's down 8.5% this year and 35% since Oct. 6. Analysts are describing this as a deep recession, especially as other risk assets have risen during the same period.
Analysts see it as a reset rather than a fundamental collapse
Despite the steep decline, Kobeissi Letter claims that the fundamentals of cryptocurrencies have improved. The firm believes the market is undergoing a structural reset, primarily due to the forced outflow of leveraged positions.
Therefore, analysts say leverage and liquidation, rather than fundamentals, explain the current volatility. They expect the situation to stabilize once excess risk is removed from the system. In their view, the market may be nearing the bottom.
