Bitcoin price collapse leads US$1 trillion crypto crash

Bitcoin, Ethereum and most every major crypto are in freefall. But why?

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published November 21, 2025 11:55 am AEDT

It's a sea of red on the crypto boards today, with the Bitcoin (CRYPTO: BTC) price tumbling another 4.8% over the past 24 hours.

At time of writing in late morning trade on Friday, the world's first and biggest digital token is trading for US$87,038 (AU$134,922). That gives it a market cap of US$1.73 trillion.

Now, that's still a lofty valuation by longer-term standards. After all, only 10 years ago BTC was trading for just US$400.

But it's certainly been a painful journey for crypto investors arriving late to the party.

As you may recall, it was only on 7 October that the Bitcoin price rocketed to a new record high of US$126,198, according to data from CoinMarketCap.

Meaning crypto investors who bought at those levels will currently be nursing losses of 31%.

And with the vast majority of major cryptos joining the sell-off, we've now seen more than US$1 trillion wiped from the global digital asset sector.

A man sits at his computer with his head in his hands while his laptop screen displays a Bitcoin symbol and his desktop computer screen displays a steeply falling graph. — Image source: Getty Images

Why is the Bitcoin price falling so hard?

Following the past five weeks rout, the Bitcoin price is now down 8.0% since this time last year. That sees the token significantly underperforming the 1.5% gains delivered by the S&P/ASX 200 Index (ASX: XJO).

Not to mention the 84.9% one-year gains posted by the S&P/ASX All Ordinaries Gold Index (ASX: XGD). An unwelcome reminder, perhaps, to those who've lauded the token as 'digital gold'.

The latest pressure on the Bitcoin price comes on several fronts.

First, investors are significantly paring back expectations of another interest rate cut from the US Fed this year. And Bitcoin has proven to be highly sensitive to interest rates.

Second, the token remains a risk asset. And with the Nasdaq Composite Index (NASDAQ: .IXIC) coming under pressure amid growing fears of a pending AI bubble burst, a lot of crypto investors look to be lightening their Bitcoin exposure, along with sending AI chip maker Nvidia Corporation (NASDAQ: NVDA) shares down 3.2% overnight.

Commenting on the US$1 trillion crypto collapse, said James Butterfill, head of research at CoinShares, said (quoted by Bloomberg), "Investors are stabbing in the dark a bit — they haven't got any direction on macro, so all they can see is what on-chain whales are doing and they're getting quite worried about it."

Matthew Hougan, chief investment officer at Bitwise Asset Management, added:

I think we are closer to the end of the selling than the beginning, but markets are uncomfortable and crypto could have more downside here before it finds a base to recover from.

What about Ethereum?

As mentioned, the Bitcoin price is far from the only one getting hammered lately.

Ethereum (CRYPTO: ETH), the world second biggest crypto, is down 6.3% over 24 hours, currently trading for US$2,847.

The Ethereum price is now down 42.5% since the token notched its own record high of US$4,954 on 25 August.

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