Leverage-Induced Sell-Offs Cause Simultaneous Decline in Stocks and Cryptocurrencies

Bitget-RWA2025/11/07 14:56

By:Bitget-RWA

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On November 4, U.S. stocks started the day in the red, as all three major indices—the Dow Jones, S&P 500, and Nasdaq—fell amid a resurgence of investor wariness. The Dow slipped 0.68%, the S&P 500 lost 1.12%, and the Nasdaq dropped 1.58%. This collective downturn reflected broader weakness in crypto-related stocks, according to a

Lookonchain report

. Digital asset-linked companies were among the most affected, with

Strategy

Inc. (MSTR) plunging 5.14%, reversing its previous gains as a

Bitcoin

holding company.

Coinbase

(COIN) and

Robinhood

(HOOD) also experienced significant losses, dropping 4.49% and 3.35% respectively, as leveraged bets across the crypto industry were unwound, according to

Crypto.News

This weakness in traditional markets extended into the crypto sector, with Bitcoin falling below $104,000 and alternative coins such as

Ethereum

and

Solana

suffering heavy weekly declines, as reported by Crypto.News.

Leverage-Induced Sell-Offs Cause Simultaneous Decline in Stocks and Cryptocurrencies image 0

XRP

, Ripple’s associated token, dropped 6% to $2.25. Analysts cautioned that if it fails to maintain support near $2.00, further losses could follow, based on a

CoinPedia analysis

. The overall crypto market shed more than 4% in value, with total capitalization falling to $3.45 trillion, highlighting the vulnerability of leveraged trades in such a volatile climate, according to a

CryptoFront News analysis

Early trading before the market opened had already indicated a downward trajectory, with crypto-related stocks like MicroStrategy (MSTR), Coinbase (COIN), and

Bitmine Immersion Technologies

(BMNR) all declining between 3% and 5%, as noted by

Coinotag

. Smaller companies focused on crypto, such as SharpLink Gaming (SBET), faced even sharper drops, losing over 4% of their value, according to Crypto.News. The broad sell-off underscored the close relationship between crypto asset prices and the stock performance of companies tied to the sector.

Market anxiety was further heightened after top executives from leading investment banks like Goldman Sachs and Morgan Stanley issued warnings about possible declines in equities. Since early October, the crypto market correction has wiped out $1.2 trillion in value, driven by a 20:1 leverage ratio that led to widespread liquidations, as reported by CryptoFront News. Experts believe a rebound may occur once open interest falls below $30 billion and ETF inflows stabilize. For now, however, the ongoing interaction between traditional and digital assets continues to fuel uncertainty, leaving investors on edge for more volatility ahead.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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1. Technology stocks fell sharply as investor interest shifted toward energy and selected defensive assets. From October 10 to 16, the Nasdaq 100 declined 5.49% and the S&P 500 fell 1.95%, while the Dow gained 0.67% and WTI crude rose 10.41%. BTC, ETH, and SOL declined 1.27%, 2.65%, and 4.44%, respectively. This week's technology earnings will be an important test of whether revenue growth, margins, and cash flow can justify current valuations. Better-than-expected results could help stabilize markets in the near term. 2. Crypto continues to see pockets of strong activity, but a broad-based altcoin season has yet to materialize. CoinMarketCap's (CMC) Altcoin Season Index stood at 54 as of the October 18 UTC daily observation, below the altcoin-season threshold of 75, while BTC dominance rose to 60.08%. Our proxy leverage ratio fluctuated between 4.00 and 4.07 during the week, showing no sustained increase and suggesting limited appetite for additional leverage. Meanwhile, as major exchanges expand access to traditional financial assets, the recent sell-off in AI-related equities could attract short-term speculative capital away from crypto. Such capital rotation could make it more difficult for a new altcoin season to take hold. 3. Papertrade's loss-to-mine model has generated significant interest across the crypto community. The protocol combines high-leverage derivatives trading with zero slippage and a mechanism that rewards trading losses with PAPER tokens. Across the eight complete UTC days from October 10 to 17, cumulative reported revenue reached approximately $56.08 million, including $51.90 million distributed to token holders. With growing participation from key opinion leaders (KOLs), Papertrade has reportedly ranked among the top three platforms by profitability in the broader market recently. Assets to watch: BTC, ETH, SOL, ARB, OP, SKHYNIX, SKHY, META, TSLA, LRCX, and SPCX. Key research priorities this week: Cash flow performance in technology earnings; the relative discount and holding costs of the two SK Hynix contracts; and U.S. initial jobless claims and PMI data. Weekly market data cover the period through October 16, while research information was verified through October 18. Observation periods are specified separately for each chart.

Bitget•2026/10/19 06:51