Crypto Downturn Erases Nearly All 2025 Gains

In just over a month, nearly all of this year’s cryptocurrency market gains have vanished. At its peak on October 6, the combined market capitalization of all cryptocurrencies reached a record high of nearly $4.4 trillion. But since then, a steep 20% decline has pared those gains down to a modest 2.5% increase for the year, according to data from CoinGecko.

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The selloff began after roughly $19 billion in leveraged positions were suddenly liquidated an event that rattled investor confidence and left traders hesitant to bet on a quick rebound.

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This dramatic reversal caught many off guard, especially in a year that had seen growing institutional adoption and stronger regulatory frameworks around digital assets.

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President Donald Trump’s efforts to position the U.S. as a global hub for cryptocurrency had previously fueled optimism across the market, helping Bitcoin surge as much as 35%. Yet, in a striking turn of events, the total value of digital assets has now dropped below the level seen when Trump first took office highlighting how quickly sentiment can shift in the volatile crypto space.

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Bitcoin itself has been hit particularly hard. The world’s largest digital currency has fallen 8% so far this week, putting it on pace for its worst weekly performance since March. It also slipped below its 200-day moving average, a key technical level that had acted as support since the 2022 bear market. As of Friday morning in London, Bitcoin was trading near $101,000.

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While the decline has been broad-based, the steepest drops have been concentrated in altcoins the smaller, more speculative cryptocurrencies that typically move more dramatically than Bitcoin or Ether. These tokens have been lagging the broader market for months.

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“Outside of Bitcoin and Ether, most of the crypto space has been under pressure,” said Augustine Fan, a partner at SignalPlus. “There hasn’t been much fresh capital entering altcoins or DeFi projects, and investor interest remains muted.”

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Fan added that ongoing regulatory uncertainty and persistent security concerns are keeping mainstream investors on the sidelines, dampening hopes for a near-term recovery.

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According to Jeff Mei, chief operating officer of the BTSE crypto exchange, the latest downturn has also been influenced by broader market dynamics particularly the growing concern that AI-related stocks are overvalued. “If we see a deeper selloff in AI and tech shares,” Mei warned, “Bitcoin could easily slip below $100,000, and altcoins would likely take an even harder hit.”

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Despite the widespread pessimism, there are early signs that the market could be stabilizing. After six straight days of net outflows, U.S. spot Bitcoin and Ether exchange-traded funds (ETFs) finally recorded $253 million in inflows on Thursday a potential signal that some investors are cautiously stepping back into the market.

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Even so, analysts caution that the path to recovery will likely be uneven. The recent slump underscores how sensitive cryptocurrencies remain to shifts in investor sentiment, macroeconomic conditions, and broader trends in risk assets like technology and AI.

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For now, the crypto market’s focus has shifted from exuberant growth expectations to damage control and consolidation. Traders are watching whether Bitcoin can hold the $100,000 level, which many view as a psychological floor that could determine whether this correction deepens or stabilizes.

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Meanwhile, the industry’s long-term narrative remains intact. The structural advances in blockchain infrastructure, the continued expansion of crypto ETFs, and greater regulatory clarity in major markets all point to a maturing asset class. Yet short-term volatility continues to test investors’ patience and conviction.

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As Fan summarized, “This cycle has shown that enthusiasm can fade quickly when momentum stalls. The challenge for crypto now is to rebuild confidence not just through price action, but through tangible progress in adoption and innovation.”

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For seasoned investors, the message is clear: while digital assets remain an exciting frontier, patience and discipline are once again proving to be the most valuable assets in a market that still moves at lightning speed.

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