On Nov. 18 the Wall Street Journal article, ["The Crypto Trades That Amplified Gains Are Now Turbocharging Losses”](https://www.wsj.com/finance/currencies/crypto-stock-market-gains-losses-c25a2124?gaa_at explores the world of insane levels of leverage with which crypto currency is purchased, to explain why under every situation in which heavy leverage is used, there lies a potential deleveraging situation ready to let loose.
On Oct. 6, the price of a single bitcoin, the emblem of the crypto movement, stood at $126,000 a “coin”; now, six weeks later, it is down by $33,000 to $93,000, a fall of 26%. Anyone who owned merely 100 coins, has lost $3.3 million.
The crypto leverage, which has escalated since President Donald Trump became President in January 2025, has been institutionalized into the U.S. economy. The Wall Street Journal disclosed the extent of the leverage that is available in this crypto casino market: “investors have never had more ways to place complex wagers on crypto. In some cases people can put down $1 of their own money to gain exposure to $100 of bitcoin”; that is a leverage of 100 times.
Some of the concrete markets in which one can obtain leverage: “This summer [2025],” the Journal reports, “Coinbase, the largest U.S. exchange, launched perpetual futures, a type of financial contract that never expires and lets traders bet on digital tokens’ rise using up to 10 times leverage.” Further, the Cboe market, which was formally called the Chicago Board Options Exchange, “plans to launch bitcoin and ether continuous futures with ten-years expirations in December.” Indeed, in January 2025, the U.S. Securities and Exchange Commission approved the existence of crypto exchange-traded funds or ETFs. (An ETF is a “basket” of instruments, in this case crypto, which one can buy and sell, changing what is in the basket, during market hours). By picking up a phone, one can trade crypto at night.
Since crypto has no real value and commands no productive capacity, what props up its price is the expectation that tomorrow its price will, by some external force, be higher than today’s. When it is not, disaster can occur, leading to liquidations.
Another article, warning of collapse, on Nov. 18 in The Economist article, “Crypto Got Everything It Wanted. Now It’s Sinking” states: “The biggest risk is that the miserable sentiment in cryptocurrency spreads to other markets.… [Crypto] is much more closely correlated with technology stocks…. Contagion could work in either direction: Gloom about pricey tech stocks would weaken bitcoin, or flighty bitcoin investors could flee the equity markets.”
The implosion of these markets will cause a financial firestorm, also involving AI stocks and derivatives, which will cause deprivations to more than 100 million of the poorest families in America—and many more millions in other countries—which have never purchased or owned crypto, but which explosion will push them further below the survival level.
