The crypto market continues to slide, deepening bearish sentiment even as macroeconomic conditions appear broadly supportive.
The recent downturn lacks clear fundamental catalysts and may indicate that crypto is approaching a structural bottom, says The Kobeissi Letter analysis.
$1.1 Trillion Lost in More than a Month
Over the past 41 days, the crypto market has shed more than $1.1 trillion in total capitalization or an average of $27 billion per day. Market cap levels now sit roughly 10% below those seen during the record $19 billion liquidation on October 10.
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Kobeissi analysts describe the move as “structural,” noting that the severity of the decline stands in contrast to largely unchanged fundamentals.
According to their commentary, the downturn has been “strange” for one core reason:
there have been a few materially bearish developments on the fundamental side of crypto.
Despite this, prices have continued to fall sharply. Bitcoin has dropped 25% in the last month, even after US President Donald Trump emphasized that making America “number one in crypto” is a top national priority.
Leverage Behind the Downtrend
The analysts point to leverage as a primary factor amplifying the pullback. After institutional outflows in mid- to late-October, crypto investment funds recorded $1.2 billion in outflows during the first week of November.
The problem is that these outflows collided with excessive leverage, a longstanding feature of crypto markets where traders commonly take highly leveraged positions like 20x, 50x, or even 100x.
This dynamic creates a domino effect during price drops, triggering aggressive liquidations. On October 10, forced selling reached $19.2 billion, leading to the first-ever $20,000 daily candlestick in Bitcoin.
In the last 16 days, the market experienced three separate days with liquidations exceeding $1 billion, particularly during thin-volume trading hours. As a result, volatility spiked and sentiment deteriorated. The Crypto Fear Greed Index has returned to “Extreme Fear,” matching the lows of February 2025.
Gold Diverges From Bitcoin, ETH Hit Hardest
Analysts also highlight a growing divergence between Bitcoin and gold. For over a year, the two assets moved in high correlation, but since early October, gold has outperformed BTC by 25%.
Ethereum’s (ETH) decline, meanwhile, has been even more pronounced. Since early October, ETH has fallen 35%, exceeding typical bear-market severity, which is unusual given that risk assets across global markets have broadly rallied in the same period.
This disconnect supports the view that crypto is experiencing a “structural” bear market, even as its fundamental value continues to improve.
“As with any efficient market, the wrinkles will work their way out,” Kobeissi analysts note. “We think the bottom is near.”
Macro Signals Point Toward Liquidity Expansion
Despite the ongoing sell-off, the broader macro environment remains supportive of risk assets, historically a tailwind for crypto. Kobeissi analysts point to several liquidity-positive developments.
The global money supply continues to swell, with worldwide M2 hitting an all-time high of $137 trillion. Japan is also gearing up for more than $110 billion in fresh stimulus, marking a significant move from one of the world’s largest capital exporters that’s expected to push additional liquidity into global markets.
In the United States, households are set to receive $2,000 in tariff-related payments, effectively boosting disposable income. Similar relief measures played a major role in fueling the 2020–2021 retail-driven crypto boom.
Historically, crypto has tracked global liquidity closely. Each major rally from 2013 to 2021 has unfolded alongside a broad expansion in M2.
Why This Matters
If crypto market liquidity is rising while prices are falling, the disconnect could signal that crypto’s sell-off is driven more by market mechanics than macro fundamentals and that a reversal may be closer than sentiment suggests.
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People Also Ask:
Crypto prices historically correlate with global liquidity. Rising M2 money supply, stimulus, and household disposable income often support crypto bull cycles.
It refers to a prolonged market decline caused by internal market dynamics, such as leverage and liquidations, rather than fundamental issues.
High leverage amplifies market swings. When prices drop, leveraged positions are liquidated, causing a domino effect and sharp declines.
