Ethereum News Update: Overleveraging and Retail Hype May Lead to a 50% Cryptocurrency Plunge

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Ethereum News Update: Overleveraging and Retail Hype May Lead to a 50% Cryptocurrency Plunge

Bitget-RWA2025/11/21 09:30

By:Bitget-RWA

- Alliance DAO co-founder QwQiao warns next crypto bear market could see 50% drawdown due to excessive leverage and inexperienced investors flooding spot assets and ETFs. - DATs (decentralized autonomous tokens) face sharp reversal risks as inflows plummet 82% to $1.93B in October, while BlackRock's IBIT ETF sheds $2.47B amid record outflows. - Market fractures as critics argue "dumb money" rhetoric oversimplifies maturing crypto adoption, while Ethereum's price struggles and Japan's $135B stimulus fail to

Alliance DAO co-founder QwQiao has delivered a strong caution that the upcoming crypto bear market could be much harsher than many expect, fueled by rampant leverage and a surge of novice participants. In a post dated November 21,

QwQiao pointed out that a "large group of uninformed investors" purchasing spot assets

and ETFs without a clear grasp of the risks might trigger a 50% market drop before conditions are set for another bull run. His remarks echo wider industry worries about underlying vulnerabilities, such as

increasing withdrawals from major ETFs like BlackRock's IBIT

This warning gained momentum as Placeholder partner Chris Burniske supported QwQiao's perspective,

saying the "DAT era" of forced liquidations is only just starting

. DATs—Decentralized Autonomous Tokens linked to creator or attention-driven economies—have seen rapid growth this year but are now considered at risk of a sharp downturn. Burniske

highlighted that the "Friday massacre" in October

, which resulted in $20 billion worth of crypto positions being wiped out, signaled the onset of a difficult capitulation period.

Ethereum News Update: Overleveraging and Retail Hype May Lead to a 50% Cryptocurrency Plunge image 0

Recent market statistics reinforce these apprehensions.

DefiLlama recorded an 82% decrease in DAT inflows

to $1.93 billion in October, down sharply from $10.89 billion in September.

November appears set to be the weakest month

for DAT inflows in 2025, with only $505 million reported so far.

BlackRock's IBIT ETF, seen as a major market barometer

, lost $2.47 billion in November amid unprecedented outflows, indicating declining faith in crypto’s current direction.

These warnings have ignited discussion within the crypto sector. While some investors agree that inexperienced participants often panic and sell during turbulent times,

others believe calling them "dumb money" oversimplifies

the ongoing evolution of the market. At the same time, Ethereum’s price struggles further highlight the instability of the present cycle.

FG Nexus, an Ethereum treasury management company

, sold close to 11,000 ETH to finance share repurchases, illustrating the mounting pressure on digital asset treasuries (DATs) as crypto prices falter.

Larger macroeconomic trends are also at play.

Japan’s recent approval of a $135 billion stimulus plan

in November has failed to halt the ongoing market slide, with

Bitcoin

dropping below $85,500—a 7% fall in just 24 hours and a 20% loss over the past month. Meanwhile, Ark Invest has taken a contrarian approach, putting $40 million into crypto-related stocks such as Bullish and Circle as their prices dropped, signaling confidence in long-term prospects despite current setbacks.

QwQiao’s alerts are part of a broader trend of caution among experienced investors. He has previously

stressed the importance of eliminating excess leverage

and speculative retail activity before a healthy bull market can return. With ongoing macroeconomic uncertainty and rising ETF outflows, the market could be heading for a deeper correction than many anticipate.

As Burniske remarked, "just as it rose all the way"

, "it will now fall all the way".

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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