Why Is Bitcoin and the Crypto Market Crashing?

A lot of investors woke up wondering how everything changed so quickly. The screens were green just a few weeks ago, then suddenly the entire market flipped. The question on everyone’s mind is simple. Why is Bitcoin crashing again, and why is the crypto market following so aggressively?

The trend feels familiar to anyone who has lived through previous cycles. The climb looks steady until something snaps. Many traders felt that the rally had gone on for too long without a real shakeout. The drop below $90,000 reminded them of how emotionally driven this market can be.

Bitcoin Price Weakness Sends Shockwaves Across Major Tokens

Bitcoin sits at the center of every major move in crypto, so weakness in BTC always spills into the rest of the market. The decline over the past 7 weeks has been sharp. The price has fallen by around 30 percent and returned below $90,000 for the first time in months. The entire chart shifted from confident strength to visible stress in a short window.

Large caps reacted almost immediately. The fall in BTC dragged down many popular tokens that usually mirror Bitcoin movements. The pressure came from several factors, and analysts have been vocal about what they believe triggered the selloff. Crypto Patel highlighted the scale of the wipeout across traditional markets and digital assets.

BREAKING: Massive Market WipeoutOver $1 trillion has been erased from the US stock market in a single day, signaling one of the sharpest sell-offs in recent months.Meanwhile, the crypto market saw over $120 billion vanish from its total market cap, reflecting heightened… pic.twitter.com/GlbT8ArxNs

— Crypto Patel (@CryptoPatel) November 21, 2025

The drop erased more than $1 trillion from the US stock market in a single day. The crypto market lost more than $120 billion within the same period. Crypto Patel described it as a reminder of how quickly liquidity and sentiment can collapse when global risk appetite weakens.

This kind of environment tends to expose fragility in tokens with weaker narratives. Only a few small pockets of the market have managed to stay green despite the turbulence.

Analysts Point to Funding Dynamics, Liquidity Stress and Fading Momentum

Several analysts have tried to break down what pushed Bitcoin into such a sharp downturn. Jacob King offered one of the most direct explanations. He argued that the explosive move from $15,000 to $126,000 came from three major forces. His view centers on Tether minting, retail FOMO and exaggerated confidence in institutional demand.

His warning focused on what happens when those drivers slow down. Jacob King stated that Tether reduced printing, retail demand weakened and the fantasy around institutional accumulation became harder to maintain. His conclusion was that Bitcoin became extremely vulnerable without consistent inflows supporting the trend.

Bitcoin pumped from $15,000 to $126,000 for 3 main reasons:1. Tether, the largest fraud on planet earth, pumped out billions of fake USDT daily and funneled it into Bitcoin and altcoins to enrich insiders.2. That synthetic demand surge triggered retail FOMO and pulled in…

— Jacob King (@JacobKinge) November 20, 2025

The commentary may sound controversial, yet it reflects a growing concern among traders. Many feel that the rally relied heavily on liquidity engines rather than fundamental adoption. This created a fragile structure that could unravel quickly once momentum stalled.

The Kobeissi Letter approached the crash from a macro angle. The analysis linked the sudden market drop to an unexpected announcement from the US Labor Department regarding upcoming employment data. The Kobeissi Letter noted that the S&P 500 was already sliding before the announcement. The crash accelerated sharply afterward. The analysis pointed out that markets react badly when information becomes limited ahead of major Federal Reserve decisions. The employment data blackout created uncertainty that amplified every sell order.

This explanation aligns with a long standing view in both crypto and equities. Sentiment becomes highly sensitive during periods when traders feel blind to incoming data. The Kobeissi Letter explained that modern markets move in extreme swings because capital flows respond to small headlines with outsized reactions. Investors are on edge, so even simple triggers can escalate into multi trillion dollar moves.

WHY are markets crashing? Our logical explanation:There is quite literally only ONE headline that can even be partially blamed for such a sudden market crash.At 11:20 AM ET, the US Labor Department said the November and October employment “situation” will be released on… pic.twitter.com/zubNQstd5l

— The Kobeissi Letter (@KobeissiLetter) November 20, 2025

Broader Crypto Market Feels the Impact of Liquidity Outflows

Bitcoin’s sharp decline triggered a chain reaction throughout the market. Liquidity drained from major altcoins as traders rushed to secure profits or cut positions before deeper losses formed. The effect was immediate across top tokens that often depend on BTC stability for direction. Projects without strong catalysts saw some of their steepest drops in months.

The selloff also exposed a deeper issue. Many investors entered the market during the excitement around artificial intelligence, tokenized assets and global adoption stories. These narratives carried the market through the earlier part of the year. The recent downturn has forced many traders to reconsider whether the rally was sustainable at its pace. This shift created hesitation that spread through exchanges and on chain activity.

Several tokens with clear utility or strong community interest still managed to resist the worst of the fall. Their stability came mainly from consistent user activity rather than speculative hype. These few exceptions created a contrast between projects with steady fundamentals and those dependent on broader market momentum.

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Macro Uncertainty Keeps Pressure on Bitcoin and the Entire Crypto Market

The current drop did not come from a single cause. It came from a combination of liquidity stress, macro uncertainty, fading momentum and shifting sentiment. Bitcoin remains the largest driver of everything in the digital asset landscape, so any weakness at the top spreads across the market.

The Kobeissi Letter described the moment well. The market has become so polarized that any headline can ignite a cascade of trillions. Many traders recognize that this is not the kind of environment where confidence remains steady for long. Crypto thrives on clarity, yet recent announcements created the opposite. The fear of another unexpected data release or rate shift continues to weigh on investor behavior.

The question many readers have is whether the crash signals a long term reversal or a strong reset before the next leg of the cycle. The answer depends on how quickly liquidity returns and whether key macro events turn supportive again.

The one certainty is that crypto always moves faster than most expect. The drop below $90,000 shows how quickly conditions can change, even after months of strength.

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