This week, risk appetite has sharply deteriorated, and AI-driven stock market momentum has finally stalled.

Author: @Jjay_dm

Translation: Deep Tide TechFlow

Market Update – November 24, 2025

The collapse of AI-driven market momentum has triggered a rotation into safe-haven assets, with the cryptocurrency market cap falling below $3 trillion, marking the third consecutive week as the worst-performing major asset class. Weak employment data, declining interest rate expectations, and pressure from the Japanese market have further compounded the situation against a backdrop of thin holiday liquidity. The cryptocurrency market positions have been readjusted, with funding rates turning negative, while spot trading volume remains stable.

Macro Update

This week, risk appetite has sharply deteriorated, and AI-driven stock market momentum has finally stalled. Despite Nvidia's earnings report performing well again, the related rally was short-lived, and the market quickly seized the opportunity to sell off. This reaction marks a clear shift in market behavior: investors are using strength to reduce positions, indicating that AI trading is losing support from new buyers. As U.S. tech stocks retreat, the pressure is directly transmitted to the cryptocurrency market, with the total market cap falling below $3 trillion for the first time since April.

Macro data has further exacerbated market fragility:

• Non-farm payroll (NFP) added 119,000 jobs, but the unemployment rate rose to 4.4%

• The probability of a rate cut in December has dropped to about 30%

• The Japanese market is under pressure, with a steepening yield curve (bear steepening) and a weakening yen, raising concerns about its ability to continue absorbing U.S. Treasuries

• European and Asian markets are also showing weakness, with the Chinese market experiencing profit-taking in the AI sector and renewed pressure in real estate

• UK inflation has eased, but the impact is limited against the backdrop of low liquidity during the U.S. Thanksgiving holiday

As a result, cryptocurrencies have become the worst-performing major asset class for the third consecutive week, with widespread sell-offs and long position liquidations leading to significant declines in altcoins.

Despite the ongoing instability in the macroeconomic environment, positive changes are emerging within the cryptocurrency market's internal structure. Since Bitcoin (BTC) traded near $115,000 at the end of October, funding rates have turned negative for the first time, marking the longest duration of negative rates since October 26. Leverage is skewed towards short positions, and capital flows have returned to the spot market, with spot trading volume showing unexpectedly strong performance despite the shortened holiday trading week. This combination indicates that the market has completed a comprehensive reset, and once macro pressures ease, it will be in a more favorable stable state.

Among the top 100 tokens by market cap, correlations are primarily concentrated in the top 10, which have also performed the worst. This reflects that the largest assets are trading as a single macro sector, completely tied to broader risk sentiment. In contrast, tokens ranked 50 to 100 have seen relatively smaller declines and are showing early signs of decoupling, with trading relying more on unique drivers. This aligns with the actual market situation: some narrow narratives (such as proxy protocols, privacy, decentralized IoT DePIN) are still driving short-term outperformance, even as the overall market remains weak.

Meanwhile, Bitcoin's volatility continues to rise, with the 7-day realized volatility (RV) rebounding to near 50.

Sector Performance Generally Weak, High Volatility Areas Hit Hardest:

• Layer 2 (L2) down 14.9%

• Gaming sector down 12.0%

• Decentralized IoT (DePIN) down 11.4%

• Artificial Intelligence (AI) down 10.5%

• Mid and small-cap assets also underperform

• Core Layer 1 protocols (Core L1s) down 7.0%, GMCI-30 index (@gmci_) down 7.2%, showing slightly better relative performance

This round of decline shows almost no differentiation, clearly reflecting the macro-driven sentiment of comprehensive de-risking that has engulfed all sectors.

The chart above shows data from Monday to Monday, hence the differences from the first chart.

Our View:

Despite the digital asset market being deeply entrenched in a de-leveraging wave triggered by the macro environment, the market is now at a stage where consolidation is finally showing potential.

After experiencing macro-driven de-leveraging, digital assets first faced pressure from the cooling AI frenzy, followed by the Federal Reserve's adjustments to market expectations. However, the internal structure of the market has now significantly improved. Mainstream assets are showing more pronounced relative strength, market sentiment has completely cleared, and leverage risks have been greatly reduced. The total open interest in perpetual contracts has dropped from about $230 billion in early October to around $135 billion now, primarily due to the de-leveraging of long-tail assets and the exit of systemic capital flows. This change has pushed market activity back to the spot market, where depth and liquidity have performed better than expected in the thin holiday liquidity environment.

This is crucial: when leverage levels drop to such low levels, and the spot market becomes the main trading flow, market recoveries tend to be more orderly than the mechanical squeezes seen at the beginning of the year. The existence of negative funding rates and net short perpetual contracts also reduces the risk of further forced liquidations, providing the market with more breathing room, especially if the macro environment stabilizes. The coming days will determine how we enter the final month of the year, but after weeks of macro pressure, the market finally has the conditions for consolidation.

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