From 2,600% Surge to 86% Crash: Crypto’s Hottest Trade Collapses
What was once hailed as the hottest trade in the cryptocurrency market has come crashing down, with one of the sector’s most hyped tokens shedding roughly 86% of its value from its peak, erasing billions in market capitalization and leaving investors reeling.
The sharp reversal follows a period of explosive growth that saw the token surge more than 2,600% over the course of a year, drawing in retail and institutional capital alike. At its height, the asset was the centerpiece of countless trading strategies and social media hype cycles, with analysts and influencers touting it as a generational opportunity. Now, it stands as a stark reminder of the volatility and risk inherent in speculative digital assets.
From meteoric rise to brutal correction
Over the past 12–18 months, the token in question rode a wave of bullish sentiment fueled by new protocol upgrades, aggressive marketing, and a surge in decentralized finance (DeFi) and meme-coin mania. Its price climbed from single-digit cents into the double-digit dollar range, attracting a flood of retail investors chasing outsized returns.
At its all-time high, the token’s market cap briefly eclipsed that of several established mid-cap cryptocurrencies, and its trading volume regularly ranked among the top 10–20 digital assets globally. Social media platforms were flooded with charts, memes, and calls to “diamond hands,” reinforcing the narrative of unstoppable momentum.
But that momentum has now reversed with brutal force. In recent weeks, the token has plunged roughly 86% from its peak, wiping out nearly all of its 2025 gains and leaving many holders deep in the red. The collapse has been accompanied by a broader pullback in risk assets, with Bitcoin itself recently dropping below $90,000 and erasing its 2025 gains amid a wave of profit-taking and macro-driven risk-off sentiment.
Why the trade fell apart
Analysts point to a confluence of factors behind the collapse. On the technical side, the token’s price had become extremely overbought, with many indicators flashing extreme euphoria before the reversal. Once selling pressure began, it triggered a cascade of stop-loss orders and margin liquidations, accelerating the decline.
On the fundamental side, questions have grown about the token’s long-term utility and sustainability. Despite the hype, adoption of the underlying protocol has lagged expectations, and revenue or usage metrics have failed to keep pace with the price surge. As a result, many investors have begun to question whether the valuation was ever justified.
“This was a classic case of a narrative-driven, momentum-based trade that ran too far, too fast,” said a senior digital asset strategist at a major trading firm. “When the narrative started to crack and macro conditions turned risk-off, the unwind was inevitable.”
Market structure also played a role. The token’s high volatility and relatively shallow order books made it vulnerable to large sell orders and whale movements. Reports suggest that several large holders began offloading positions in recent weeks, further undermining confidence and fueling panic selling.
Broader implications for crypto markets
The collapse of this once-hyped trade is emblematic of a broader shift in the crypto market. After a strong start to 2025, driven by Bitcoin ETF inflows, institutional adoption, and optimism around regulatory clarity, sentiment has soured amid rising macro uncertainty, tighter monetary policy expectations, and a wave of profit-taking after years of strong returns.
Bitcoin’s recent dip below $90,000 and Ether’s roughly 40% correction from its 2025 highs have further dampened risk appetite. Options markets now show heightened demand for downside protection, with traders pricing in further declines toward $85,000 and even $80,000 for Bitcoin.
“Momentum is a self-feeding machine,” said Anna Wu, cross-asset investment strategist at Van Eck. “If we use Bitcoin as a market sentiment gauge, it’s pointing to bear-market level fear.”
Meanwhile, long-term holders and institutions that piled into Bitcoin during the 2025 rally are now exiting positions, amplifying the selloff and increasing contagion risks across the broader crypto and tech markets.
Is this the end, or just a reset?
Despite the severity of the correction, some analysts argue that this may be more of a sharp, temporary dip than the start of a prolonged bear market. Bitcoin, for example, has weathered similar drawdowns before, including a drop to around $74,000 in April 2025 before rebounding to new highs later in the year.
“How the market behaves over the next several days will signal whether this becomes a deeper reset or just a sharp, temporary dip in an otherwise intact cycle,” said Haider Rafique, global managing partner at crypto exchange OKX.
For the token at the center of this latest collapse, the path forward is less clear. While some die-hard supporters still believe in its long-term potential, the near-term outlook remains highly uncertain. Many traders are now focused on risk management, capital preservation, and waiting for clearer signs of stabilization before re-entering the market.
For now, the story of this once red-hot crypto trade serves as a cautionary tale: in a market driven by narratives and momentum, even the most spectacular gains can vanish in a matter of weeks.