By Thor Goldbar, on September 23, 2025
The year 2025 is proving to be a dark milestone in global financial history. While the American dollar, once the unshakable pillar of international trade, undergoes a record devaluation, the cryptocurrency market — touted as the digital salvation of the traditional economy — plunges into a catastrophic collapse. These two events, seemingly disconnected, are intertwined by threads of speculation, erratic government policies, and a widespread erosion of confidence in risk assets. In this article, we explore the causes, impacts, and potential exits from this financial storm, based on recent data and expert analyses.
The Dollar's Free Fall: From Global Reserve to Neglected Asset
The U.S. dollar, which represented 58% of global foreign currency reserves at the beginning of 2025, recorded its worst half-year performance since 1973. The DXY index, which measures the dollar against a basket of six major currencies (including euro, yen, and pound), plummeted 10.8% in the first half of the year. In July, the decline accelerated, with the euro rising 13% to above $1.17 and the yen gaining ground amid concerns about the Federal Reserve's independence. This is not a mere correction; it is a sign of structural erosion.
The causes are multifaceted. Donald Trump's re-election in 2024 brought back an aggressive protectionist agenda: "stop-start" tariffs on Chinese and European imports, coupled with a tax bill that would add trillions to the U.S. national debt, already at $37.3 trillion in August 2025. Economists warn that this "tariff war" did not strengthen the dollar as expected, but weakened it by elevating recession fears — with U.S. growth projections dropping from 2.3% to 1.4% in the first quarter. Additionally, dollarization is gaining traction: emerging central banks, such as those in China and India, are diversifying reserves into gold and euros, reducing reliance on the greenback from over 70% in the 2000s to the current 58%.
The impact is visceral. Investors flee from U.S. Treasuries, pushing 10-year yields to 4.5% in April, while European stocks rise 15% (or 23% in dollars). For commodity-exporting countries like Brazil and Nigeria, the weak dollar boosts revenues but exacerbates imported inflation in the U.S., where food prices rose 5.8% in 2023 and remain pressured. Analysts at Goldman Sachs predict an additional 10% drop against the euro in the next 12 months, echoing the 1985 "Plaza Accord," which orchestrated a coordinated depreciation. However, a total collapse — hyperinflation or loss of reserve status — remains unlikely in the short term, thanks to the depth of American markets.
The Apocalypse of Cryptocurrencies: Bubble Bursts with $1.7 Billion in Liquidations
If the dollar stumbles, cryptocurrencies fall off a cliff. September 2025 marked the largest liquidation event in history: $1.7 billion in leveraged positions evaporated in 24 hours, with $1.6 billion in longs (bullish bets) — surpassing the COVID-19 crash, the FTX collapse in 2022, and the fall of LUNA. Bitcoin, which reached $124,000 in August, plummeted to below $115,000, dragging the total market down by $200 billion in market value. Ethereum and XRP followed the same fate, with global market cap dropping from $4.2 trillion to pre-peak levels.
The trigger? A toxic combination of macroeconomics and speculation. Trump's tariffs, announced in February, shook risk assets, with Bitcoin falling 20% in a week after the imposition of 15% tariffs on American coal and LNG. Stricter regulations, such as the "Genius Act" in the U.S., which allows yields on stablecoins but warns of $6.6 trillion in bank deposit outflows, fueled panic. On X (formerly Twitter), traders reported: "$2.23 billion liquidated in 24h, more than FTX and LUNA combined. Bitcoin at $95k, but altcoins bleed out."
Experts like Henrik Zeberg, a macroeconomist, call this the "era bubble": the market could reach $12.95 trillion by the end of 2025 before collapsing to $93 billion, returning to 2022 levels. Aggravating factors include excessive leverage in corporate treasuries (like MicroStrategy) and security scandals, such as the LIBRA collapse in Argentina. The historical four-year cycle of Bitcoin — driven by halving — seems broken, with long-term holders accumulating, but macro volatility (rising Japanese yields) dominating.
Intersections: How a Weak Dollar Fuels Crypto Chaos
The collapses are not isolated. A weakened dollar, driven by fiscal deficits and tariffs, drains liquidity from risk assets like crypto, which depend on speculative capital inflows. Bitcoin ETFs, which injected billions in 2024, saw outflows in September, with BlackRock and Fidelity facing redemptions. Countries in dollarization, like China, are accelerating the adoption of CBDCs (central bank digital currencies), marginalizing private cryptos. Elon Musk of Tesla warned of a "$37 trillion warning" in debt, echoing fears that stablecoins could trigger a massive bank run.
Lessons and the Horizon Ahead
This dual crisis exposes systemic fragilities: unsustainable debt in the U.S., uncontrolled speculation in crypto, and a retreating globalization. For investors, the advice is clear: diversify into gold (which is hitting records in 2025) and real assets, avoid leverage, and monitor the Fed — interest rate cuts in September may soften the dollar but exacerbate bubbles. Economists predict a V-shaped recovery for crypto in Q4, with Bitcoin at $150,000 if the Fed cuts rates, but warn of corrections of 50% or more.
The 2025 collapse is not the end of the dollar or cryptocurrencies, but a brutal reminder: modern finance is fragile. As the Atlantic Council stated, "regaining trust is harder than losing it." Meanwhile, the world watches, betting on the next act of this financial tragedy.
