Crypto meltdown: $1.1 trillion wiped out in 41 days as leverage fuels frenzy

President Trump recently declared that making America “number one in crypto” is a top priority. This lofty goal hasn’t exactly helped Bitcoin, which has plummeted 25% in just one month, leaving Americans juggling inflation, student loans, and health care premiums while watching digital gold stumble.

Crypto markets have endured a staggering decline over the past six weeks, erasing $1.1 trillion in market capitalization — or roughly $27 billion per day — according to The Kobeissi Letter, a financial research and commentary platform.

The total crypto market is now about 10% below levels seen during the record $19 billion liquidation on October 10, marking what analysts are calling a structural and mechanical downturn.

The selloff has been puzzling for some, given that fundamentals remain largely intact. The Kobeissi Letter points to institutional outflows beginning in mid-to-late October as a key catalyst. Crypto funds reportedly saw $1.2 billion in outflows in the first week of November, a movement magnified by extreme leverage common in the market.

Crypto leverage allows speculators to take positions 20x, 50x, or even 100x their capital. In this environment, even a 2% move can trigger mass liquidations, creating a domino effect across the market.

October 10th’s $19.2 billion liquidation led to the first-ever $20,000 BTC daily candlestick, illustrating just how sensitive leveraged markets have become. Over the last 16 days alone, there have been three days with liquidations exceeding $1 billion, and daily liquidations of $500+ million have become the new normal.

The volatility has also shaken sentiment. The Crypto Fear & Greed Index has plummeted to 10, “Extreme Fear”, tying the low seen in February — even as Bitcoin (BTC) is up 25% since April’s bottom. Meanwhile, traditional safe-haven gold has outperformed Bitcoin by 25 percentage points since early October.

The slump is particularly severe outside of Bitcoin. Ethereum (ETH) is now down 8.5% year-to-date, with a 35% drop since October 6th, underscoring the depth of the selloff despite a broader rally in risky assets.

Despite the carnage, The Kobeissi Letter remains cautiously optimistic, stating, “We think the bottom is near.”

Here’s the Kobeissi thread: