Why the crypto market struggles in 2025 and the hidden forces that could spark its next big move
The crypto market has been one of the worst performers in 2025, gaining less than 3% over 10 months – far behind gold, stocks, and bonds. This has many investors worried that the crypto bull run is over. But beneath surface turmoil, big shifts are reshaping demand. In this article, you’ll learn what’s really driving—and holding back—the crypto market today, why massive liquidations shook out both retail and big traders, and where fresh demand might come from. This deeper look reveals key catalysts that could set the stage for crypto’s next chapter.
The Harsh 2025 Crypto Reality: Why Has Growth Stalled?
The crypto market’s modest 3% return this year pales in comparison to:
- Gold’s 55% rise
- The US stock market’s 12% gain
- Treasury bonds’ 6% increase
Given crypto’s notorious volatility and risk, this underperformance has been painful for investors who expected bigger gains. Adding to the gloom is a record $19 billion wiped out in a single 24-hour crypto leverage liquidation event earlier this year. Over 1.4 million leveraged positions were liquidated, forcing 1.6 million traders—mostly retail—out of the market and pushing sentiment to extreme fear territory.
What Does This Leverage Flush Mean for Crypto?
Large, experienced traders were once the market’s main drivers. But after this washout, the average leverage order size plummeted from $10,000 to just $2,000—an 80% collapse. Charts tracking order sizes show that big “green” and “yellow” clusters from high-net-worth traders vanished completely. What’s left? Mostly small retail trades at much lower stakes.
This shift means:
- Speculative capital from “whales” has dramatically pulled back
- Without active big players, crypto can struggle to build momentum
- The market risks stagnation or sideways movement until fresh interest returns
Investor takeaway: The market today lacks strong directional bets from large participants, making price moves more fragile.
Answer Box: What Happened in the Largest Crypto Liquidation Event of 2025?
In early 2025, over $19 billion in leveraged crypto positions were liquidated within 24 hours, the largest ever recorded. This forced 1.6 million traders, mostly retail investors, out of the market and caused crypto sentiment to drop to extreme fear levels unseen since the 2022 bull run began.
Beyond Leverage: Three Hidden Drivers of Crypto Demand
Even though leveraged speculation has declined, other sources of demand for crypto could reshape the market’s outlook.
1. ETF Flows for Bitcoin and Ethereum
Bitcoin and Ethereum are the only tokens with widely available exchange-traded funds (ETFs).
- From early 2025 to April, these ETFs experienced steady outflows, coinciding with a 35% crypto market drop.
- Between April and July, large inflows followed a 65% rally.
- Since August, inflows and outflows have balanced, keeping prices sideways.
Signal: ETF flows are a cautious “yellow light,” showing mixed institutional appetite.
2. Digital Asset Treasury Companies
Public companies holding crypto as treasury reserves have stepped up their allocations significantly. Since October 2024:
- Bitcoin held by treasury companies rose from 1.5% to over 4% of total supply
- Ethereum and Solana holdings jumped from zero to about 3.5% and 3%, respectively
- New adopters appeared for Avalanche, TON, Litecoin, signaling growing confidence
This structural demand locks up supply, potentially limiting tokens available for trading and amplifying future inflows.
Signal: Strong “green light” from corporate balance sheet allocations.
3. Upcoming Institutional Demand from Pending Funds
More than 90 crypto-focused funds await approval from U.S. regulators, including top altcoins Solana and XRP.
- Regulatory delays due to government shutdown have paused approvals
- Once resolved, the approval process is expected to accelerate rapidly
- Precedents set by Bitcoin and Ethereum ETFs raise odds new funds will pass
This upcoming wave could inject billions into the crypto market.
Signal: Potential “green light,” pending political and regulatory developments.
Data Callout: Crypto Treasury Holdings Climbing
Since late 2024, crypto treasury balances have surged:
| Token | Share Held by Treasury Companies (Oct 2024) | Share Held (Now - Mid 2025) |
|---|---|---|
| Bitcoin | 1.5% | 4% |
| Ethereum | 0% | 3.5% |
| Solana | 0% | 3% |
This shift reflects growing corporate confidence and structural supply reduction.
Why This Matters: Crypto Could Shift from Speculation to Stability
Despite the painful leverage purge, the market may be laying groundwork for healthier demand sources. Without big speculative bets, momentum may stall short term. But income-focused treasury buying and new ETF funds suggest crypto is maturing as an asset class.
From a macro perspective, risk assets remain attractive, and crypto—though off to a slow start this year—has already outperformed many traditional investments since 2022. ---
Risks and What Could Go Wrong
- Regulatory uncertainty remains high; rejections of pending funds could trigger sharp sell-offs.
- Retail investor participation is still dominant; volatile sentiment could cause further large liquidations.
- Macro shocks (interest rate hikes, geopolitical risks) may shift risk appetite away from crypto.
- ETF flows remain mixed, signaling lack of clear institutional conviction right now.
Stay cautious. Healthy consolidation often precedes major moves, but it’s no guarantee of upside.
Actionable Summary
- The 2025 crypto market’s 3% gain lags traditional assets by a wide margin.
- Record $19B leverage liquidation cut out many large players, leaving mostly smaller retail traders.
- ETF flows show mixed institutional interest—neither bullish nor bearish.
- Corporate treasury crypto holdings are rising sharply, locking supply and boosting demand.
- Over 90 crypto funds await U.S. approval, potentially unlocking billions in fresh institutional capital.
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FAQs
Q1: Has the crypto bull run ended?
Not necessarily. Despite underperformance this year, structural demand sources suggest the market is consolidating within a larger uptrend.
Q2: What caused the $19 billion leverage liquidation?
A sudden market drop triggered margin calls forcing liquidations, especially among retail traders with highly leveraged positions.
Q3: How significant are ETF flows for crypto?
ETF flows mirror institutional interest. Mixed flows in 2025 indicate indecision but remain a key demand indicator.
Q4: Why are treasury companies buying crypto?
They view crypto as a reserve asset to diversify balance sheets, creating more stable, long-term demand.
Q5: When will pending crypto funds be approved?
Approvals depend on government operations resuming after shutdowns. Once active, the process should accelerate given regulatory precedents.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Crypto investments carry risks, and past performance does not guarantee future results. Always conduct your own research and consider consulting a licensed financial advisor.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile
