Bitcoin Crash 2025: Strategy ETFs Plunge 80% as Retail Traders Suffer While Monad, Zcash and New Bitcoin Layer‑2s Battle for the Future

On December 2, 2025, the crypto market is still reeling from one of its sharpest pullbacks since 2021. Bitcoin has dropped from an October peak above $126,000 to the mid‑$80,000s, wiping out close to 30% of its value and triggering nearly $1 billion in leveraged liquidations in just 24 hours. ^[1]

Retail traders who chased high‑octane Bitcoin plays are now at the center of the storm. Leveraged exchange‑traded funds (ETFs) tied to Strategy Inc (the rebranded MicroStrategy, ticker MSTR) have plunged more than 80% this year, while the company itself scrambles to reassure investors with a $1.44 billion “US dollar reserve” designed to keep its Bitcoin‑linked dividend machine running. ^[2]

At the same time, a very different story is unfolding on the speculative edge of crypto. Monad, a high‑performance smart‑contract chain, is quietly building momentum despite its chaotic launch. Zcash (ZEC), once a flagship privacy coin, continues to slide. And a new Bitcoin Layer‑2 presale called Bitcoin Hyper (HYPER) is marketing itself as an “infrastructure play” for BTC DeFi with eye‑catching staking yields and nearly $28 million already raised. ^[3]

This is what today’s mixed picture looks like — and what it might mean for traders and long‑term believers in Bitcoin and crypto.

1. Crypto Market Today: From Breakout Euphoria to Forced Deleveraging

The immediate backdrop to today’s headlines is a fast, leverage‑driven drawdown across digital assets.

According to Bloomberg data reported via multiple outlets, Bitcoin fell as much as 8% on Monday to around $83,800–$84,000, before stabilizing near $85,000–$87,000. Ether dropped roughly 10% to the low $2,700s, while an index of smaller, less liquid tokens is now down close to 70% for the year. ^[4]

On‑chain and derivatives trackers show that this move wasn’t just about spot selling:

Close to $1 billion in leveraged crypto positions were liquidated over a single day. ^[5]
November was Bitcoin’s worst month since mid‑2021 in dollar terms, with more than $18,000 erased from its price as ETFs saw record net outflows. ^[6]
Total crypto market value has shed over $1 trillion from its recent peak near $4.3 trillion. ^[7]

Macro is adding fuel to the fire. A hawkish Bank of Japan has jolted global rates, while investors are now hyper‑focused on the Federal Reserve’s December 9–10 FOMC meeting, where traders are pricing a high chance of a 25 bps rate cut following Jerome Powell’s closely watched speech this week. ^[8]

In other words: crypto is being hit from both sides — positioning and policy. Leverage built up during the sprint to $126k is now being unwound into an environment where liquidity is tightening and ETF flows have turned from powerful tailwind to persistent headwind.

2. Retail’s Pain Point: Strategy‑Linked Leveraged ETFs Collapse

If there’s a symbol of how harsh the reversal has been for small traders, it’s the explosion — and then implosion — of leveraged Strategy ETFs.

Strategy Inc, the Bitcoin‑heavy corporate vehicle led by Michael Saylor, became the market’s favorite “Bitcoin proxy stock” after rebranding from MicroStrategy and amassing one of the largest BTC treasuries in the world. ^[9]

During the uptrend, a handful of issuers launched single‑stock leveraged ETFs tied to Strategy’s share price:

MSTX and MSTU, which aim to deliver 2x the daily move in Strategy stock
MSTP, another turbocharged product launched in June at the height of crypto enthusiasm ^[10]

In 2025’s drawdown, those products have turned toxic for buy‑and‑hold retail investors:

MSTX and MSTU have dropped more than 80% this year, ranking among the 10 worst‑performing ETFs in the entire US market out of more than 4,700 funds. ^[11]
MSTP is down a similar amount since launch.
Combined assets in the three funds have shrunk from over $2.3 billion in early October to about $830 million, wiping out roughly $1.5 billion in ETF capital in just a few weeks. ^[12]

Strategists quoted in the Bloomberg‑syndicated piece note two key pain points for retail:

Leverage on leverage
Strategy itself is a leveraged bet on Bitcoin (thanks to convertible debt and ongoing share issuance), and the ETFs then add another layer of daily leverage on top. That means volatility works against long‑term holders when the underlying trade reverses. ^[13]
Volatility decay and compounding
Because these ETFs are designed to track daily moves, not long‑term returns, whipsaw price action can “chip away at returns even if the stock ends flat” — a dynamic sometimes called volatility decay. In a month like November, that decay becomes brutal. ^[14]

The story here isn’t just that Bitcoin went down. It’s that complex, leveraged wrappers amplified losses for at‑home traders who often treated them like simple “supercharged Bitcoin stocks,” not sophisticated derivatives in ETF form.

3. Strategy’s $1.44 Billion Dollar Reserve: ‘Never Sell Bitcoin’ Meets Cash‑Flow Reality

While leveraged ETF holders lick their wounds, Strategy Inc itself is pivoting hard.

Over the past few years, the company transformed from an enterprise software firm into a de facto Bitcoin holding company, now owning around 650,000 BTC worth roughly $56 billion at current prices. This hoard has been funded through a mix of common equity, preferred stock and about $8.2 billion in convertible debt. ^[15]

With Bitcoin down by a third and Strategy’s shares off 40–60% from their highs this year, that model is under stress. ^[16]

To buy time, Strategy has:

Raised approximately $1.44 billion via fresh share sales
Parked that money in a dedicated “USD Reserve”, intended to cover at least 12–21 months of interest and dividend payments
Lowered its 2025 profit and BTC yield guidance, acknowledging that a lower Bitcoin price band (roughly $85,000–$110,000) could mean anything from a $5.5 billion loss to a $6.3 billion profit, far below earlier projections of $24 billion in net income ^[17]

Crucially, Strategy’s executives have begun talking about the once‑unthinkable: selling Bitcoin if a key internal metric, mNAV (market net asset value), falls below 1.0. That ratio compares the company’s enterprise value to the market value of its Bitcoin holdings; it has already slid close to what management describes as a warning zone. ^[18]

The takeaway:

Strategy is effectively building a cash bunker so it can keep paying dividends and servicing debt without dumping BTC at fire‑sale prices.
But the move also highlights a structural problem: Bitcoin does not produce cash flow, yet Strategy’s preferred stock and ETFs create fixed, recurring obligations. If the reserve runs down before the market recovers, the “never sell” mantra may collide with hard math. ^[19]

For investors, the company has become a live case study in how corporate Bitcoin treasuries behave under stress — and how quickly a celebrated “number go up” strategy can morph into a complex funding puzzle.

4. Monad Up, Zcash Down: Diverging Altcoin Narratives in a Bearish Market

Beneath the headline Bitcoin crash, today’s market also shows starkly different trajectories among alternative cryptocurrencies.

Monad: From Messy Launch to Building Phase

The Monad chain burst onto the scene with a chaotic launch: sybil‑filter issues, overheated valuations and a wave of early sellers. Yet according to 99Bitcoins’ analysis, it has held up better than many expected. ^[20]

A few factors stand out:

EVM compatibility makes Monad relatively easy for Ethereum‑native developers to target.
Integrations with cross‑chain infrastructure such as Wormhole have helped bootstrap liquidity and tooling.
Trading volume on exchanges like Bitget has remained respectable even as the wider market sells off. ^[21]

In a brutal environment, simply not collapsing is a kind of outperformance. Monad has carved out a narrative as a high‑throughput, developer‑friendly chain that still has “room to grow” despite its rocky debut.

Zcash: The Privacy Pioneer Under Pressure

Zcash (ZEC), by contrast, is facing the wrong kind of momentum:

Liquidity has shrunk as some exchanges and tracking tools have dialed back support for privacy coins amid regulatory scrutiny.
Technicals show broken support levels and momentum indicators drifting toward oversold territory.
A recent block reward halving failed to spark a sustainable rebound, raising questions about whether ZEC’s price structure is “just broken” in the current market. ^[22]

The core issue is that privacy has become a regulatory flashpoint. While Zcash’s technology is still admired, Bitcoin — with its transparent UTXO model and deep liquidity — remains the preferred asset for institutions that must answer to regulators and shareholders. ^[23]

The result: in this cycle, Bitcoin captures capital, Monad captures curiosity, and Zcash fights to stay relevant.

5. Bitcoin Hyper and the New Wave of Bitcoin Layer‑2 Presales

At the speculative frontier of today’s news is Bitcoin Hyper (HYPER) — a presale positioning itself as a Bitcoin Layer‑2 (L2) designed to “disrupt DeFi’s space.” ^[24]

According to 99Bitcoins:

Bitcoin Hyper aims to offer faster, low‑fee Bitcoin transactions plus a DeFi stack on top — effectively bringing memecoin and yield‑farming energy to the Bitcoin ecosystem.
The presale has already raised over $28 million, with nearly one million tokens staked, despite the market downturn.
Marketing materials highlight staking rewards advertised around 40% APY and a sub‑$0.02 token price pitched as having “100x–1000x potential.” ^[25]

It’s important to stress what this is — and what it isn’t:

This is a high‑risk presale, not a live, battle‑tested L2 in the same sense as long‑standing networks.
The “first and only Bitcoin Layer‑2” framing is marketing language; Bitcoin has other second‑layer and sidechain experiments, and it’s far too early to know which, if any, will achieve mainstream adoption. ^[26]
Advertised yields and “1000x” narratives are not guarantees. They reflect promotional assumptions that could easily fail, especially in a market already under pressure from deleveraging and regulatory shifts.

Still, the interest in Bitcoin Hyper — along with other presale stories circulating today, from SUI‑adjacent projects to Japan‑focused tax reforms and a potential Vanguard crypto ETF greenlight — underscores a familiar pattern: even as blue‑chip crypto assets correct, speculative capital keeps hunting for the next big thing. ^[27]

6. Lessons for Crypto Investors After December’s Shock

Bringing these threads together, today’s news flow offers a handful of clear lessons for anyone navigating the 2025 crypto market.

1. Leverage Cuts Both Ways — and Usually Deeper on the Way Down

From $1 billion in forced liquidations to 80% drawdowns in Strategy‑linked ETFs, the deleveraging wave has made one thing obvious: leverage doesn’t just magnify returns; it reshapes the risk profile entirely. ^[28]

Using:

Borrowed money
Leveraged ETFs
Options or perpetual futures

can all compound risk in ways that many retail traders underestimate, especially when the underlying asset (Bitcoin) is itself highly volatile.

2. “Proxy” Products Can Behave Very Differently from Spot Bitcoin

Strategy’s stock, its preferred equity, and the ecosystem of ETFs around it are all distinct instruments with their own cash‑flow needs, fees and structural quirks. While they may track Bitcoin over short periods, they can diverge sharply when:

Funding costs rise
Dividends become harder to sustain
Index providers threaten to kick a stock out of major benchmarks, forcing passive selling ^[29]

For investors who thought they were simply “buying Bitcoin in stock form,” this year has exposed the hidden complexity in that trade.

3. Corporate Bitcoin Treasuries Are Not Risk‑Free Hodl Machines

Strategy’s creation of a $1.44 billion USD reserve is both a sign of balance‑sheet discipline and a red flag: the company now has to juggle:

Volatile, non‑yielding BTC assets
Fixed obligations to debt and preferred equity holders
A potentially shrinking equity premium as markets question the model ^[30]

If Bitcoin remains under pressure, the tension between “never sell” rhetoric and cash‑flow reality will only grow.

4. Altcoins and Layer‑2s Are Still Pure Risk Capital

Projects like Monad, Bitcoin Hyper, and other presale‑driven narratives demonstrate that innovation and speculation are alive and well — even in a crash. But they remind us that:

Technology momentum (developer interest, integrations) can buoy projects like Monad even after a messy start.
Regulatory headwinds can weigh heavily on coins like Zcash, regardless of technical merit.
Presale promises of huge APYs and “next 1000x” returns should always be treated as marketing, not destiny. ^[31]

5. Macro Still Matters

Finally, the fixation on Powell’s speech, potential rate cuts, and policy signals from Japan and other major economies shows that crypto is deeply embedded in the broader risk‑asset ecosystem. Bitcoin may sometimes front‑run macro moves, but it is no longer isolated from them. ^[32]

7. Where the Market Stands on December 2, 2025

As of today:

Bitcoin trades in the mid‑$80,000s after an 8% intraday drop and one of its worst months in years. ^[33]
Strategy Inc has built a $1.44B dollar reserve, slashed its guidance, and seen its stock and associated ETFs slump, hitting retail traders hard. ^[34]
Monad is pushing forward with integrations and developer interest despite earlier chaos.
Zcash continues to slide amid liquidity issues and regulatory unease.
Bitcoin Hyper and other presales are trying to turn the crash into an entry point for new, high‑risk narratives in Bitcoin DeFi and altcoins. ^[35]

For traders and investors, this is not investment advice — but it is a reminder to:

Understand how you’re getting exposure (spot, ETF, corporate proxy, presale token).
Be clear about your time horizon and risk tolerance.
Treat leverage, whether explicit or hidden in product design, with extreme caution.

Crypto has survived multiple boom‑and‑bust cycles already. What makes December 2025 different is the scale of institutional involvement and financial engineering — from Strategy’s balance sheet to leveraged ETFs and Bitcoin Layer‑2 presales. That makes today’s shake‑out as much a story about market structure as it is about price.