Shades of 1929 are occurring in the crypto space and elsewhere.
Crypto liquidation occurs when a trader's position is automatically closed by an exchange due to insufficient margin to cover losses, often resulting from leveraged trading.
Crypto liquidation refers to the forced closure of a trader's position when their margin account falls below the required maintenance level. This typically happens in leveraged trading, where traders borrow funds to increase their exposure to a cryptocurrency asset. If the market moves against the trader's position, leading to significant losses, the exchange will liquidate the position to recover the borrowed funds and prevent further losses.
In the Great Crash of 1929, margin calls forced leveraged speculators to raise more cash to cover their outstanding debt on money borrowed to invest in stocks. As stock prices fell, large and small speculators alike were bankrupted in September and October of 1929 and beyond. The margin calls created a vicious loop of forced selling that eventually spilled over into the general economy. Individuals and institutions that had been living lavishly suddenly had insufficient cash to buy much more than a day's meals or a month's rent. The lack of spending by parties that had formerly been supporting the economic growth of the 1920s - among other factors - fed directly into the general impoverishment of the Great Depression.
Similarities between the boom of 1928 and bust of 1929 can be made to current conditions. The crypto market and the tech-led NASDAQ have been built up by speculators, buying ephemeral crypto issues and tech stocks with pie-in-the-sky valuations on promises of some AI-induced economic miracle by which nobody works and everybody is rich. A similar condition existed in the late 1920s, when a strong economy was producing excess income, as bankers and brokers advised everybody from shoeshine buys to retail clerks into buying stocks on margin, leveraging their returns.
It all worked quite well when stocks were going up, day after day, month after month, but the market, as always, delivered a stern correction on the way down. At first, the selling was characterized as "normal, healthy pullbacks" or "profit-taking" and stocks shrugged off losing sessions and charged ahead.
That was the first warning shot.
Next, institutional spokespeople from the Federal Reserve, the stock exchanges, and the government began making off-the-cuff remarks about the strength of the economy, none more famous than Irving Fisher's, the Yale professor and economist who declared that the stock market had reached "a permanently high plateau".
Recently, posts on X by bitcoin proponents like Tom Lee and Michael Saylor have been echoing similar sentiments, with projections of bitcoin reaching such lofty valuations of $200,000 by year's end, $400,000 in 2026 and rising into the millions by the end of the decade.
When speculators begin to make pronouncements like that with little to no academic or rational backing, a second warning beacon is triggered. Rather than facing the reality that their speculation might end in disaster, these heavily-leveraged plungers are hoping to keep the plates of their speculation spinning. It usually doesn't end well, as Mr. Market always has ideas of restoring order and reversion to the mean, which, in the case of bitcoin, would be a correction back to around $32,000, a 70% crash which would wipe out not only the diamond-handed "hodlers" of bitcoin, but most of the speculative money in ETFs and other derivative bets.
Bitcoin isn't alone in its recent liquidation-driven decline. Other popular "coins" and issues like Ethereum, Solana, Dodgecoin and hundreds of other less-well-known cryptos are being wiped out.
While "Big Daddy" bitcoin took a four percent slide on Monday, Ethereum dropped eight percent, XRP, 9 percent; Dodgecoin, 10 percent; Solana, 11.
That's just Monday. Liquidations have been prevalent throughout October, resulting in $19 billion in liquidation-induced losses. November isn't looking much better.
The crypto space may be just the most obvious canary in the economic coal mine. Billions of dollars in what was normally-spendable income has been suspended by the government shutdown. It was decided on Monday that SNAP food benefits would be funded from emergency funds, but only about half of the usual $8 billion monthly hand-out was available and it could take states weeks or even months to work out the details.
Quietly, on Friday, the Federal Reserve injected $29.4 billion into its Standing Repo Facility (SRF) to help ease strained liquidity concerns at major banks and primary dealers. This was the largest cash infusion since the pandemic. While people were pre-occupied with the government shutdown, SNAP benefits, the World Series and football, there were some panicky people in high places doing odd things with money, setting up a perfect liquidity storm that's approaching gale force.
Monday's mid-morning meltdown in stocks was far from an isolated event. The major indices hit the lows of the day around 10:30 but immediately made a U-turn to higher ground. The NASDAQ never even turned red, but the S&P did, and only ended with a slight gain. The Dow suffered in negative territory all day long.
Money being drawn out of the financial system from various sources has a snowballing effect, though it may be imperceptible at first, it becomes more and more obvious as time passes. There have been instances of defaults on car loans and credit cards and bankruptcies are on the rise. Student loan default rates have spiked to well over 10%. As of March, 2025, because of various government schemes, only 35% of all student borrowers had been making payments on time.
Another sign of trouble brewing are gatherings of business leaders boasting about investments for the future and generally celebrating prosperity. When President Trump hosted the wealthiest tech billionaires at the White House in early September the talk was all about money, technology, and investment in American enterprise. The gathering was supposed to highlight America's economic prominence. All it accomplished was making a lot of people who don't own yachts and live in penthouses envious and maybe a little bit angry.
If stocks begin to stumble and business leaders begin making exhortations about the strength of the economy - Trump is the master of saying how great and fabulous everything is - it's probably a sign that lean times are dead ahead. That happened in the run-up to the 1929 crash and ensuing Great Depression. America may not be heading for a depression on the scale of what occurred back in the 1930s, but there are troubling signs that a downturn in the economy is probably already underway. The Fed doesn't cut rates twice in a row if everything's hunky-dory. They cut - as they did in September and October - when they see trouble.
So here we are on Tuesday, November 4, 2025, and bitcoin has dropped another $3,000, down as low as $103,607 prior to the opening bell for stocks. Meanwhile, a Bloomberg headline blares: Wall Street CEOs Flag High Market Valuations, Pullback Risk as stock futures head into the tank. The article cites, among others, Morgan Stanley CEO Ted Pick and Goldman Sachs Group Inc.’s David Solomon, expressing the view that stocks could pullback 10% or more in the next 12 to 24 months. That, right there, folks, is comedy gold. Stocks could drop 10% in the next 12 to 24 weeks or 12 to 24 days, which, of course, would never be mentioned by anyone in good standing at the Wall Street casino. Statements and articles - especially from Bloomberg, the most propagandized of all media - like that are clear signs that something is up and that asset values are headed lower.
There is some good news. Dick Cheney, former VP under president George W. Bush and an original neocon, died overnight, officially, November 3. Cheney is famous for helping instigate the war in Iraq which toppled Saddam Hussein, assisted by Secretary of Defense Donald Rumsfeld (July 9, 1032 - June 29, 2021), Secretary of State Colin Powell (April 5, 1937 - October 18, 2021), Chief Advisor Karl Rove (still living) and others.
As far as speculation in crypto assets is concerned, there is ample reason to be concerned since bitcoin and the thousands of other crypto copies aren't actually money, or assets, but nothing more than numbers in blockchains. None of them - bitcoin, ethereum, fartcoin, dogecoin, or any other "coin" - has any value whatsoever, so, they are subject to the wanton whims and festering fantasies of speculators, manipulators, and swindlers running rampant in financial markets.
Just as a reality check, ask yourself if you know anybody who has bought groceries or paid rent or a mortgage with any kind of crypto. Chances are good that you don't. Crypto is more than speculation, worse than the South Sea bubble or Tulip mania. This is speculation on things that exist only in blockchains, in the ether, in cyberspace. There's neither value nor utility, only price movements. These are not investments. They are sinkholes that swallow up excess capital.
With all the speculation and super-high valuations in vaporware like crypto and blue sky promises from the AI horde, a rug-pull is almost a 100% certainty. We may be witnessing the early stages of the biggest bubble bursting in the history of mankind.
Be ready.
At the Close, Monday, November 3, 2025:
Dow: 47,336.68, -226.19 (-0.48%)
NASDAQ: 23,834.72, +109.77 (+0.46
S&P 500: 6,851.97, +11.77 (+0.17%)
NYSE Composite: 21,416.59, -42.99 (-0.20%)
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