A reflective guide for the end of 2025
We ALL got this market wildly wrong and I will be the first to admit that I didn’t see it playing out this way either. I honestly assumed that by this time we would have been at the end or nearing the end of a wild bull run, and it hasn’t even started yet.
In late summer 2025 (US summer), seasoned analysts and Wall Street banks were calling for a new crypto ‘Moonvember’. Forecasts from Golman Sachs and JPMorgan suggested bitcoin could surge past $220K USD and even up around the $250K mark. Fundstrat’s models pointed higer still. Instead the market suffered a brutal reversal, with Bitcoin falling around 30% from its October 6 peak of $126K USD to around $84K USD within 6 weeks. If you feel blindsided or that this was some form of witchcraft, you’re not alone. The collective misread of this cycle is the first lesson of todays story.
Global economic currents are the invisible hand behind the charts
2025 has been a year of wtf just happened crises after crises. Ongoing conflicts in Ukraine, Gaza, the US and China rivalry and turmoil in Sudan weigh on sentiment. On top of that, some monetary skullduggery and debauchery has played out across the blue marble:
- Protectionist trade policies. In October, U.S. president Donald Trump announced 100% tariffs on Chinese imports, retaliating against Beijing’s restrictions on rare‑earth exports. The shock wiped US$1.5 trillion off the S&P 500 within minutes and triggered a major sell‑off in crypto.
- A stagflation threat from tariffs. Independent analyses warn that aggressive tariffs could create a stagflation impulse. As one macro report put it, an environment of deteriorating geopolitics and looming tariffs changes bitcoin’s narrative from a “high‑beta tech stock” into a non‑sovereign store of value and hedge against the weaponisation of the financial system. OK, but when and how?
- Global monetary pincers. Who doesn’t love pincers? The Federal Reserve cut rates to 3.50%–3.75% in December and indicated it may pause quantitative tightening (QT), but the Bank of Japan is expected to raise its policy rate to 0.75%, threatening to unwind the yen‑carry trade that has funded leveraged crypto positions. These opposing moves squeeze global liquidity from two sides. That makes for a complete shit sandwich.
- Jobs and soft growth. U.S. nonfarm payrolls in November added only 64 000 jobs, while unemployment jumped to 4.6%, a four‑year high. Wage growth stagnated at 3.5%. Investors interpret such data as signaling both recession risk and potential relief from the Fed, increasing volatility rather than clarity. Seems we are all confused.
- The end of QT? Many analysts expect the Fed to end quantitative tightening (QT) by late 2025 or early 2026, once reserves fall to around US$2.7 trillion–3.4 trillion. Halting QT would allow liquidity to return to markets, historically supporting risk assets like bitcoin. However, if QT ends because of recession, the relief could be short‑lived, so let’s hope that won’t be the case.
This swirling macro backdrop undermines simple ‘up only’ narratives. When policymakers oscillate between stimulus and austerity, and geopolitical tensions cut across supply chains, crypto behaves less like digital gold and more like a high‑beta macro asset. Which won’t please all the crypto bros who are just here for the tech.
10 October 2025, that flash‑crash that rewrote the cycle
The October 10 flash‑crash was the single most important event of this cycle. On that day, triggered partly by Trump’s tariff bombshell, and nothing at all in any way shape or form, anything to do with Binance, more than US $19 billion in leveraged positions were liquidated within 24 hours. Bitcoin fell nearly 10% intraday and briefly dipped below $110K USD, while many alt‑coins plunged 30–60%. 1.6 million traders were affected and yet nobody wants to really speak about it. It’s been a ‘nothing to see here, move along’ type of event that is just as shocking as any major global attack or catastrophic event that would have been rigorously investigated and people brought to justice.
Analysis of the order books shows that the real carnage was mechanical. Amberdata’s forensic report found that 70% of the liquidation damage happened in just 40 minutes, with a 9.89 billion‑dollar deleveraging compressed into an algorithmic cascade. During the peak minute, $3.21 billion USD vanished in 60 seconds, and more than 93% of those orders were forced selling. Open interest collapsed by $36.7 billion USD, order‑book liquidity evaporated by 98%, and bid‑ask spreads exploded 321×. In other words, macro headlines lit the fuse, but leverage was the bomb.
Leverage is the real engine of volatility
Crypto’s growth has brought sophisticated products like perpetual futures, on‑chain leverage protocols, high‑frequency bots. These tools amplify both gains and losses. The Great Crypto Crash report observed that long positions worth $17 billion USD were liquidated when stop‑loss levels were triggered. Even after the wash‑out, U.S. spot bitcoin ETFs saw outflows of around $3 billion USD in November. On decentralised exchange HyperLiquid, margin traders often use 10× to 50× leverage, and within one 24‑hour window roughly $2 billion USD of positions were liquidated. So you can blame the people who caused it all you like, but it couldn’t have happened if there wasn’t so much leveraged.
High leverage shortens market memory and price moves become spiky rather than trending. Order books thin out, and algorithmic liquidations cascade faster than humans can react. The clean, euphoric rallies of past cycles are replaced by sharp squeezes and violent flushes. Long‑only investors expecting a blow‑off top may never see it, not because adoption has stalled but because the market structure has changed, or so it would appear.
The missing ‘top’ and the four‑year cycle
For veterans of crypto’s previous four‑year cycles, the lack of a traditional blow‑off top is disorienting. Past halving cycles saw bitcoin peak roughly 12–18 months after the block‑reward halving. In April 2024, bitcoin’s reward fell again, by October 6, 2025 the price had peaked after roughly 17.5 months, fitting the historical timeline. Yet instead of a parabolic melt‑up, the rally stalled amid the macro storms. The 50‑week moving average soon rolled over like a dog performing for biscuits, convincing many that the bear market had started.
The reality is more of a cluster you-know-what. Bitcoin is now 13% below its January 1 value, underperforming both gold and tech stocks, like when does that happen?. But the halving cycle is not broken, I think, it is being stretched and distorted by exogenous shocks, such as tariffs, liquidity drains, rate divergences, AI boom or bust cycles. In the past, the halving’s impact has often reasserted itself once macro headwinds subside.
Why this is not the end but a transition toward tokenised finance
It is tempting to view the crash as a repudiation of crypto. Yet beneath the price volatility, 2025 delivered more structural progress than any year in crypto’s history, think about that for a moment. Pantera Capital counts a long list of achievements, such as a pro‑crypto administration, the rescission of SEC SAB 121, the signing of stablecoin legislation, the inclusion of Coinbase in the S&P 500 and the IPOs of several blockchain firms. On‑chain value of real‑world assets increased 235% and stablecoins added $100 billion USD. Banks can now custody crypto assets off‑balance‑sheet, thanks to regulatory clarity.
Tokenisation is poised to drive the next adoption wave. Forbes predicts that 2026 will “belong to tokenized real‑world assets” tokenised funds, treasuries and other instruments that solve real problems such as settlement delays and capital inefficiency. Tokenisation reframes crypto from being a speculative asset class into a new way of representing ownership, shifting activity from trading to infrastructure. In 2026, regulatory changes such as the GENIUS Act and plans for a state‑backed stable token will further encourage institutional participation.
Seen through this lens, the pullback is less an abandonment than a final repricing before a more mature phase. Investors are shifting from meme tokens to tokenised treasuries, on‑chain invoices and real‑world assets. Liquidity drained by QT and leverage unwinds may soon return once the Fed stops shrinking its balance sheet.
Trump, politics and the midterm catalyst
Politics always bleed into markets, and the upcoming 2026 U.S. midterm elections are no exception, and I personally think this is the Plan A for Trump. Axios reports that President Trump and his advisers have near‑religious faith that the economy will “take off like a rocket ship” in early 2026. The optimism is rooted in the “One Big Beautiful Bill,” signed in July 2025, which extended 2017 tax cuts and introduced new write‑offs for tip earners, overtime workers and parents. Treasury Secretary Scott Bessent projects a refund boom, workers could see tax refunds of up to $2 000 USD that many will treat like casino chips, and businesses can write off capital expenditures. These measures are expected to boost consumption and investment.
Market strategists expect stocks, especially AI and energy companies, to rally into the midterms. However, Trump’s protectionist tariffs simultaneously drive up consumer prices and fuel inflation. Data from AInvest warns that the effective tariff rate surged to 18% in 2025, sparking a 17% global market sell‑off and a 14 % drop in Australian shares. Midterm years historically experience an average 17% drawdown in U.S. equities due to political uncertainty. Investors hoping for a pre‑midterm bull run should recognise that the same policies meant to juice growth, tax cuts and deregulation, also carry inflationary and fiscal risks. The market could rip higher on optimism or recoil if inflation flares. We have 2 fat guys on a see-saw at the moment and its a matter of which one is fatter.
Jobs data, QT and the pregnant pause
As we move into 2026, two forces may decide crypto’s fate, employment trends and liquidity policy. The weak November jobs report underscores a slowing U.S. economy. In response, the Fed cut rates and paused QT. Analysts expect QT to end completely by early 2026, which would expand bank reserves and support risk assets. Past cycles show that bitcoin rallies when the Fed moves from tightening to neutral or easing. So there is that.
At the same time, the December rate cut did little for bitcoin’s price,it in actuality did sweet didley squat, the coin drifted around $92 000–$94 000 USD despite a dovish Fed. This tepid reaction reveals that liquidity constraints and ETF outflows still weigh on the market, and if we want to be real here, the market we see isn’t behaving like the one we don’t see. Investors are waiting for clarity, on inflation, wages and the Fed’s next move. That is the “pregnant pause” we find ourselves in now, to use a familiar Australian term.
What lies ahead?
No one truly knows. If they did, they wouldn’t have missed the October crash, or would have they?. But we can distil a few lessons:
- Macro matters. Crypto is no longer a degen sealed garden, it is entwined with geopolitics, fiscal policy and central‑bank liquidity. Watch tariffs, central‑bank meetings and jobs data as closely as on‑chain metrics, I think.
- Leverage amplifies pain. The October liquidation cascade shows that high leverage can wipe billions in minutes. Future rallies could be sharper, but sell‑offs will be brutal as long as 10× to 50× leverage persists.
- Tokenisation is the structural trend. Real‑world asset tokenisation, stablecoins and regulatory clarity grew even as prices fell. Adoption is shifting from speculative trading to infrastructure that could underpin global finance.
- Politics cut both ways. Trump’s policies may spur short‑term growth and a pre‑midterm rally, but tariffs and deficits could boomerang. Investors should brace for volatility heading into the 2026 elections.
- Hope, tempered with humility. With QT ending and labor markets softening, 2026 could still melt faces, which means explosive gains. But if it doesn’t, we have to be honest, maybe we don’t understand this market anymore. Maybe it’s not our market anymore.
Crypto remains a nascent, rapidly evolving experiment. To navigate it now, we must balance data with conviction, macro awareness with technological optimism. Sometimes, the most honest stance is to admit we misread the present while still believing in a transformative future. Or we can just rub rabbits feet until we go up only. That choice is yours and only yours to make.
The Truth About the Current Crypto Market was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
