TLDR
The crypto market has lost over $1 trillion in just six weeks due to high leverage and large institutional withdrawals.
Bitcoin has dropped 25% in the past month, reflecting a disconnect between market sentiment and price performance.
Ethereum has fallen 35% since October 6, despite other risk assets rallying during the same period.
Forced liquidations reached $19.2 billion on October 10, contributing to continued market volatility.
Analysts believe the crypto market is undergoing a structural reset as leveraged positions are flushed out.
The global crypto market has lost more than $1 trillion in just six weeks, one of the sharpest downturns since October. Despite the absence of major negative news, analysts point to heavy leverage and institutional withdrawals as the primary drivers of the drop. The total market capitalization now sits about 10% below levels recorded after the $19 billion liquidation event on October 10.
Heavy Leverage and Large Withdrawals Drive Crypto Market Decline
The crypto market has experienced a significant downturn, driven by heavy leverage and large institutional withdrawals. According to analysts, the market’s fundamentals remain strong, but these factors have put substantial pressure on the market. “Leverage remains a defining feature of the crypto market,” said a report by The Kobeissi Letter.
What is happening in crypto?
Over the last 41 days, crypto has erased -$1.1 trillion in market cap, or -$27 billion PER DAY.
Crypto market cap is now ~10% BELOW levels seen during the record -$19 billion liquidation on October 10th.
This is a structural move. Let us explain. pic.twitter.com/5JXKFSCPXV
— The Kobeissi Letter (@KobeissiLetter) November 16, 2025
Institutional investors have withdrawn substantial amounts from crypto funds in recent weeks. Data from CoinShares showed $1.2 billion in outflows in the first week of November. These withdrawals came at a time when leverage was already high, further contributing to market volatility.
Crypto traders often use leverage of up to 50x or even 100x, which means that even small price movements can trigger large liquidations. On October 10, forced selling reached $19.2 billion, leading to Bitcoin’s first $20,000 daily candlestick. Since then, volatility has remained elevated, with multiple liquidation events exceeding $1 billion.
Bitcoin Suffers 25% Drop Amid Disconnect Between Sentiment and Price
Bitcoin has fallen 25% in the past month, despite positive political commentary surrounding cryptocurrencies. Recently, U.S. President Donald Trump expressed a desire for the United States to become “number one in crypto.” However, this optimism has not translated into price gains for Bitcoin, highlighting a disconnect between sentiment and market performance.
The Crypto Fear & Greed Index has dropped to 10, signaling “Extreme Fear” in the market. This marks a stark contrast to the positive sentiment seen earlier in the year. Even though Bitcoin is up 25% from its April trough, traders are showing heightened emotional swings amid high leverage and liquidations.
The Kobeissi Letter believes that this downturn represents a structural reset in the crypto market. “The decline is driven mainly by leveraged positions being forced out,” the firm said in its research note. Once this excess risk is cleared, analysts expect the market to stabilize.
Ethereum Faces Sharp Decline as Other Risk Assets Rally
Ethereum has also experienced a sharp decline, falling 35% since October 6. This drop comes even as other risk assets have rallied in the same period. Ethereum’s year-to-date loss now stands at 8.5%, signaling broader challenges in the crypto market.
Ethereum’s decline mirrors trends across other cryptocurrencies, as large withdrawals and high leverage have caused price instability. Analysts are watching for signs of stabilization as the market absorbs the recent forced liquidations.
Despite the sharp downturn, analysts believe that the crypto market is undergoing a reset. The Kobeissi Letter notes that the fundamentals of the market have improved, even as prices struggle. With leverage levels being reduced, analysts remain cautiously optimistic about the market’s long-term prospects.
