Crypto Crash A “Growing Pain,” Bottom Is Near: Kobeissi Letter

The crypto crash is just a “growing pain,” and with more liquidity set to add to the record $137 trillion globally, the market is nearing a bottom, The Kobeissi Letter said.

In a Nov. 16 thread on X, the macro research outlet told its 1.1 million followers that the recent market sell-off is a “structural” shift in market dynamics rather than a collapse in crypto’s underlying value.

“The fundamental value of crypto has only improved, but market dynamics are shifting,” it said. “Every 25%+ downturn in crypto history has had the same exact outcome: investors call for the end of crypto only for it to be followed by new record highs.”

It noted that there’s more liquidity on the way to add to the record $137 trillion in global M2 money supply, with Japan preparing a $110 billion-plus stimulus and US President Donald Trump vowing to give $2,000 stimulus checks to millions of Americans who aren’t already wealthy.

“As with any efficient market, the wrinkles will work their way out,” it said. ”We think the bottom is near.”

Crypto Markets Reel

The firm’s comments come as crypto markets reel from a sharp correction. Market leaders Bitcoin and Ethereum have plunged more than 10% in the past week and ETH is down 17.5% in a month.

XRP is also down 10% in the past week while Solana has plummeted 16% in the past week and 23.4% in a month.

To support its argument that crypto is close to a bottom, it posted a picture of the Bitcoin vs gold chart.

“For 12+ months, Gold and Bitcoin moved with high correlation; the safe haven assets,” The Kobeissi Letter said. But gold has outperformed Bitcoin by 25 percentage points since early October, it added, suggesting that better times are ahead for BTC if the correlation is to resume. 

Therefore, when you really zoom out, it seems that crypto is in a “structural” bear market.

The fundamental value of crypto has only improved, but market dynamics are shifting.

As with any efficient market, the wrinkles will work their way out.

We think the bottom is near. pic.twitter.com/ra2QaFwoHy

— The Kobeissi Letter (@KobeissiLetter) November 16, 2025

Leverage Played A Major Role In Crypto Market Crash

The Kobeissi Letter said excessive leverage is behind the crypto market crash, with traders often using 20x, 50x, or even 100x leverage, adding that even a 2% move at 100x leverage may be enough to wipe out a trade.

“When millions of traders are using leverage, this leads to a domino effect,” it said, adding that the market was vulnerable to sharp liquidations once prices turned lower.

Those positions are now being forced out, something the firm says is a painful but necessary reset ahead of the next accumulation.

The correction began on Oct. 10, it said, when a record $19 billion in leveraged positions were liquidated after Trump announced 100% additional tariffs on China’s exports.

It noted that crypto funds saw around $1.2 billion in outflows in just the first week of November and that leverage led to three days of $1 billion-plus in liquidations in the past 16 days, while “daily liquidations of $500+ million have become a normal occurrence.”  

It also appears to be a structural and mechanical downturn.

It all began with institutional outflows in mid-to-late October.

In the first week of November, crypto funds saw -$1.2 billion of outflows.

The problem becomes excessive levels of leverage AMID these outflows. pic.twitter.com/m5ZHgygNPx

— The Kobeissi Letter (@KobeissiLetter) November 16, 2025

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