Global cryptocurrency market capitalization has evaporated by $1 trillion: a healthy pullback or the beginning of a Bear Market?

According to Bloomberg, on November 19, 2025, Bitcoin fell to $88,522, the lowest level since April, driving the total market capitalization of Crypto Assets down from the peak of $4.3 trillion on October 6 to $3.2 trillion, losing more than $1 trillion in just six weeks. The market vulnerability was exposed during the $19 billion leveraged Position liquidation event on October 10. Although sentiment slightly recovered after NVIDIA's earnings report, analysts warned that the psychological barriers of $85,000 and $80,000 may face tests. The root cause of this round of decline lies in the delayed expectations for Fed interest rate cuts and the structural retreat of institutional demand.

Trillion Market Capitalization Erosion Trajectory: From Historical Highs to Deep Corrections

On October 6, 2025, the total market capitalization of Crypto Assets surged to a historic peak of $4.3 trillion, with Bitcoin reaching a high of $126,000 during the same period. However, the market then took a sharp turn, and by November 19, the total market capitalization shrank to $3.2 trillion, a decrease of 25.6%. During this period, Bitcoin fell to a low of $88,522, a 30% retracement from its high; Ethereum lost the critical support of $3,000, falling over 40% from its nearly $5,000 high in August.

This pullback not only devoured retail bottom-fishing funds but also severely impacted the equity premiums of digital asset treasury enterprises, with many listed companies' cryptocurrency asset book losses expanding. The market liquidity vulnerability erupted on October 10, when $19 billion in leveraged positions were forcibly liquidated, triggering a chain reaction of margin calls, ETF outflows, and stagnation of new buying, creating a negative feedback loop.

Leverage Traps and Institutional Withdrawals: Derivatives Market Amplifying Volatility

In this round of decline, leveraged traders have become the biggest victims. According to K33 Research, the open interest in Bitcoin perpetual contracts increased by 36,000 BTC (approximately 3.3 billion USD) last week, marking the largest weekly increase since April. The unusual aspect is that despite the continuous fall in prices, the funding rate remains in positive territory, reflecting that traders are positioning themselves for a rebound by placing limit buy orders at low levels.

This “catching the falling knife” strategy faced a Waterloo after breaking below 98,000 dollars, triggering orders that formed actual leverage exposure, yet the expected rebound did not materialize. Compared to the big dump in October, the current leverage scale seems moderate, but the mismatch between retail risk appetite and institutional capital outflows has created new vulnerabilities. Historical data shows that in seven similar situations, Bitcoin experienced an average monthly fall of 15% in six of them.

Crypto Assets market key data comparison (October-November 2025)

• Market Capitalization Peak: 4.3 trillion USD (October 6)
• Total Market Capitalization: 3.2 trillion USD (November 19)
• Bitcoin Maximum Drawdown: 30% (126000 USD to 88522 USD)
• Ethereum Price Range: 5000 USD to 3000 USD
• Maximum Daily Clearing Amount: 19 billion USD (October 10)
• Perpetual Contract Weekly Position Increase: 3.3 billion USD

Shift in Macroeconomic Narrative: Collapse of the Dual Pillar Theory

The rise of Bitcoin at the beginning of the year was built on two pillars: expectations of Fed rate cuts and accelerated institutional adoption. However, these two pillars wavered simultaneously in the fourth quarter. The interest rate market's probability of a rate cut in December plummeted from 91% to 34%, while Bitcoin ETFs experienced consecutive large net outflows, with BlackRock's IBIT losing $1.6 billion in a single month. A deeper issue is the sustainability of institutional allocations being questioned—when retirement accounts and registered investment advisors lower their allocations to Crypto Assets, the structural buying power that originally absorbed miner sell-offs quickly disappears.

At the same time, the U.S. government's policy to raise tariffs on China by 100% is impacting global risk appetite, with tech stocks and high-beta assets like Crypto Assets being the first to feel the pinch. CoinShares research director James Butterfill pointed out: “Investors are groping for direction in the dark, and the lack of macro clues is causing them to overly rely on on-chain whale behavior, which is now causing anxiety.”

On-chain Signals and Technical Analysis: Where is the Bottom?

From on-chain data, the holding ratio of long-term holders (LTH) has risen to 76%, but exchange balances have increased by 120,000 BTC in the past two weeks, suggesting that some large holders may be preparing to reduce their positions at higher prices. From a technical perspective, Bitcoin needs to recover $93,500 to reverse the short-term downtrend, with key support levels at $88,000 and $77,000 (April lows).

Matthew Hougan, the Chief Investment Officer of Bitwise, believes: “The sell-off may be nearing its end, but the market is still in an uncomfortable state, and Crypto Assets may further dip before finding a bottom.” This assessment is based on the progress of derivative Position liquidations and signs of slowing ETF outflows, but caution is warranted if the dollar continues to strengthen or tech stocks continue to pull back, as Crypto Assets may struggle to stand alone.

Is the Trillion Evaporation a Healthy Correction or the Beginning of a Bear Market?

The market has a divergence regarding the nature of the current fall. The optimistic view believes this is a healthy deleveraging process in a bull market, similar to the new upward trend that started after a 30% correction on April 2024; the pessimistic tone points out that the retreat of institutional demand may persist, and if the weekly outflows from ETFs continue, the price may test the support at $77,000.

It is worth noting that in this market capitalization evaporation, the proportion of “paper losses” is significant, and the actual capital outflow scale is smaller than the total market capitalization change, which leaves a potential for rebound. Investors should pay attention to the changes in the correlation between Bitcoin and U.S. stocks. If a decoupling phenomenon occurs, it may indicate the restart of independent market trends for Crypto Assets.

FAQ

1. What assets are included in the calculation of the total market capitalization of Crypto Assets?

Covering all traceable tokens, but Bitcoin and Ethereum account for over 60%, while the top 10 tokens account for over 85%.

2. How can ordinary investors determine the market bottom?

The combination of signals such as the positive funding rate for observed futures, the slowdown in ETF outflows, and the fear and greed index dropping to extreme values (currently the lowest since April).

3. Will the correlation between Bitcoin and tech stocks continue?

In the short term, the risk sentiment strengthens the correlation, but the halving cycle and unique factors such as institutional adoption may lead to decoupling.

4. Why does Ethereum perform worse than Bitcoin?

Affected by the delay in ETF approval and intensified competition in Layer 2, if the Ethereum ETF is approved, it may quickly recover its losses.

5. How severely have altcoins been damaged in this round of fall?

The average fall of the top 50 altcoins by market capitalization exceeds 45%, but the tokens in the infrastructure and AI sectors are relatively resistant to the decline.