Bitcoin Plunge and AI Stock Slowdown: What is Happening in the 2025 Market?

Bitcoin Plunge & Stock Decline: Why "End of Risk-On" is Stirring X

In mid-November, both Bitcoin and the U.S. stock market simultaneously collapsed, causing anxiety on X (formerly Twitter) and TikTok, with voices expressing concern that "the real bear market of 2025 may have arrived."

According to U.S. reports, Bitcoin, which hit an all-time high of over $126,000 just six weeks ago, has since fallen by about 26%, briefly plunging below $90,000.WTOP News

Meanwhile, on the same day, U.S. stocks also fell, with the Dow Jones down about 0.9%, the S&P 500 down 0.6%, and the tech-heavy Nasdaq Composite down 0.9%.WTOP News

"If both stocks and cryptocurrencies fall together, there's nowhere to escape." Such laments are flooding social media, but what exactly is happening in the market right now?

1. What's Happening: Is Bitcoin Undergoing a "Bull Market Correction" or the Beginning of the End?

Let's first organize the current situation.

• Bitcoin

  • Surpassed $100,000 for the first time in December 2024.WTOP News

  • Soared to over $126,000 in early October 2025, driven by expectations of Trump’s re-election and "crypto-friendly" policies.WTOP News

  • However, it then plummeted and is currently hovering around $90,000, returning to levels that have almost wiped out the gains since the beginning of the year.WTOP News

• U.S. Stocks

  • Tech stocks, which have been driving the generative AI boom, are weak. Major stocks like NVIDIA, Amazon, and Microsoft have also fallen by several percent.WTOP News

  • The tech-heavy Nasdaq Composite has already dropped more than 6% from its all-time high at the end of October, wiping out approximately $2.5 trillion in market capitalization.WTOP News

• Market Sentiment

  • The VIX index (fear index) has risen by 11%.

  • CNN's "Fear & Greed Index" has also fallen into the "Extreme Fear" zone.WTOP News

Looking at the numbers alone, it's clear that investor sentiment has rapidly shifted from "greed" to "fear."

2. Why Did They Collapse Simultaneously: The Uncertainty of the Fed and Overvaluation

There are two major factors behind this simultaneous decline.

(1) The Fed's (Federal Reserve System) Stance is Unclear

What investors are most concerned about is whether the Fed will actually move to cut rates next month.

Until now, the market has been operating under the expectation that,

"The economy is slowing down. Inflation has peaked. Therefore, a rate cut should come soon."

Based on this expectation, funds have been pouring into risk assets like AI-related stocks and Bitcoin.

However, as inflation indicators and employment statistics continue to show "surprisingly strong" numbers,
the view that "the Fed might continue to wait and see" has gradually spread, causing a reverse rotation in risk assets that had risen on expectations.

(2) Overvalued AI Stocks and Bitcoin

Another issue is valuation (stock price levels).

• AI-related stocks had surged by optimistically pricing in "future profits."

• Bitcoin was also excessively bought on the premise that regulatory risks would diminish, supported by crypto-friendly policies under the Trump administration—such as the enactment of the GENIUS Act regulating stablecoins and the appointment of a crypto-friendly figure as the head of the SEC (U.S. Securities and Exchange Commission).WTOP News

In other words, because a large part was bought based on "expectations and stories," it was in a state where selling could easily trigger more selling if there was any cause for disappointment.

3. Why Bitcoin's Decline is Harsher than Stocks: Lack of Liquidity and "Old Guard's Profit-Taking"

Although both are risk assets, there are reasons why the decline in stocks and Bitcoin differs.

(1) The Scars Left by October's "Trauma"

According to reports, Bitcoin experienced a sharp drop that could be called a "flash crash" on October 10. The trigger was a statement by President Trump reigniting the trade war with China.WTOP News

At that time, many market makers (professional traders who support the order book) suffered significant losses,
and it is pointed out that the Bitcoin market's order book became "thin" afterward.

When the order book is thin, even a small amount of sell orders can cause significant price movements. During this decline,

"Risk-averse selling similar to stocks"
resulted in
"extreme price fluctuations in Bitcoin."

This may have manifested.

(2) Profit-Taking by Long-Term Holders

Another factor is the profit-taking by long-term holders.
Funds and individual investors who have held large amounts of Bitcoin over the years are believed to have started selling when it rose above $120,000, thinking "it's time to lock in some profits."
WTOP News

Since long-term holders have large holdings, their selling quickly impacts the price.
Coupled with macroeconomic concerns and a thin order book, what was intended as a "minor correction" has taken on the appearance of a full-fledged bear market.

4. Gold and Stocks Still in Positive Territory, Bitcoin "Giving Up This Year's Profits"

Interestingly, when comparing returns so far this year, it's not that "Bitcoin is uniquely weak."

• S&P 500: Up about 13% year-to-date (still positive even after factoring in the recent decline)WTOP News

• Gold: Up about 53% year-to-date, strengthening its presence as a safe assetWTOP News

• Bitcoin: Started the year around $94,000 but is now below that level, erasing almost 11 months of gainsWTOP News

In other words, even in a risk-off market, "stocks and gold are still somehow in positive territory,"
while "Bitcoin, with its large fluctuations, has also seen extreme profit erosion."

5. Reactions on Social Media: Panic, Opportunity, and Calm Factions

What are the voices on social media in response to this market?
Here, we pick up some typical reactions, taking into account the actual atmosphere (the content of the posts is an image).

(1) Panic Faction: "Another Cryptocurrency Bubble Burst"

• "I invested three months' salary in Bitcoin just as it fell below $90,000. Why do I always buy at the top...?"

• "Both AI stocks and Bitcoin are all negative. Will 2025 be a 'lost year'?"

Such posts are particularly common among individual traders engaged in leveraged trading.
Cries of "I got stopped out" and "My margin evaporated" are signs that the market is truly painful.

(2) Opportunity Faction: "A Reward Sale for HODLers"

On the other hand, there are also many bullish people who see this as an "excellent buying opportunity."

• "After falling to $74,500 in April, Bitcoin rose to over $120,000. If it follows the same pattern this time, isn't now the time to buy?"WTOP News

• "When the fear index rises, just keep calmly accumulating with dollar-cost averaging."

Long-term investors seem to be viewing the volatility with a calm perspective, thinking "it's business as usual."

(3) Calm Faction: "Mixing Stocks, Bonds, Gold, and Cryptocurrencies is Realistic"

Furthermore, the "realists who don't lean either way" are increasing.

• "To prepare for times when both stocks and Bitcoin fall, keep positions in gold and cash—now is the time to remember the basics written in investment books."

• "A 100% cryptocurrency portfolio is fun when it goes up, but it becomes a life risk when it goes down. At least decide on a proportion."

The discussion is shifting from "Bitcoin or stocks" to "what proportion of each asset to hold."##HTML_TAG_441