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Cryptocurrencies have suffered declines lately, taking a beating as investors use them as a source of liquidity to purchase other assets, according to multiple analysts. This development caused a more severe decline by triggering the liquidation of many long positions.
“Right now, the primary driver of the decline in Ethereum, Bitcoin, and the crypto market in general is opportunity cost,” Tom Bruni, editor-in-chief & VP of community at Stocktwits, stated via email.
“In the equity market, there is strong momentum across sectors and industries, as the U.S. stock market indexes make new all-time highs,” he added.
The market observer made this statement after the benchmark S&P 500 index climbed to almost 6,700 on Monday, September 22, Google Finance data reveals.
The same day, several digital currencies took a tumble, with ether, the second largest by total market capitalization, falling roughly 9% from approximately $4,450 to $4,050, according to Coinbase data from TradingView. Bitcoin also pushed lower, approaching $111,500.
Bruni explained further, indicating that “For Ethereum and Altcoins as a group, their 2021 highs remain the ceiling on prices, keeping prices rangebound. As a result, traders and investors are using crypto as a source of liquidity to fund other trades, waiting for fresh all-time highs (or heavily discounted prices) to lure them back into the market.”
George Kailas, CEO of Prospero.ai, also weighed in on this matter, specifying via email that “The largest trade in the history of $MAGS (the Magnificent 7 ETF) took place last Friday, and within just a few trading days, $GOOG, $SPY, $BAI (the artificial intelligence ETF), $AVGO, and $NDAQ all recorded their largest trades ever as well.”
“Normally, you wouldn’t expect a more optimistic rate environment to coincide with Crypto selling off,” he continued. “To me, though, it makes sense in the context of what’s happening.”
“After such an epic run-up in Crypto, we may now be seeing profit-takers rotate back into stocks,” said Kailas.
Several analysts commented on the massive liquidations of leveraged positions that have taken place recently, which helped fuel significant declines in crypto values.
“It appears that late last night, on 9/21/2025, $1 billion in Bitcoin longs were liquidated within an hour, prompting a reaction from the crypto market, which saw approximately $1.7 billion in liquidations across both longs and shorts over the last 24 hours, the YouTuber who goes by Wendy O stated via email.
Kailas also offered his perspective on this sharp depreciation. When asked specifically about ether and the 9% decline it suffered on September 22, he stated that “Whales selling pulled some of the initial momentum out of ETH, which then accelerated as trading bots, stop-loss triggers, and retail traders panicking on bigger moves all followed suit.”
“The fact that there were already a lot of leveraged long positions made the decline unfold even faster,” he continued.
Mike Maloney, CEO and Founder of Incyt, also weighed in, specifying that “a huge liquidation across crypto markets is thinning the herd of long investors, and washing the price out. Of course some of this is from happy investors cashing in on ATHs.”
“This creates a great entry point once it consolidates around $4,000, and we can expect another push up in a few days,” he said, offering a positive short-term outlook.
