The Recent Bitcoin Crash: An Ethical Analysis for the Ethical Investor

The world of cryptocurrencies is once again shaken by strong volatility. After reaching historic highs, Bitcoin experienced a spectacular drop, raising questions and concerns among many investors. For the ethical investor, this situation raises fundamental ethical questions. How can one navigate this tumultuous market while respecting the principles of Islamic finance? This article aims to analyze the recent Bitcoin crash from an ethical perspective, focusing on the concepts of Gharar (uncertainty) and Riba (interest), in order to offer avenues for reflection towards more responsible crypto investing.

Understanding the Recent Volatility in the Cryptocurrency Market

To fully grasp the ethical stakes, it is essential to understand the reasons behind Bitcoin's recent plunge. After hitting a record of $126,251.31 at the beginning of October 2025, Bitcoin lost nearly 30% of its value in one month, falling below the $90,000 mark on November 19, 2025 [1]. Several factors explain this sudden decline.

First, announcements by U.S. President Donald Trump concerning China rekindled fears of a trade war, pushing investors away from assets deemed risky. Next, uncertainty about a possible cut in the U.S. Federal Reserve’s (Fed) benchmark interest rates weighed on the market. High interest rates indeed make the dollar more attractive than cryptocurrencies.

Finally, internal factors within the cryptocurrency market amplified the movement. Many traders had used leverage to bet on Bitcoin’s rise. When the price started to fall, their positions were automatically liquidated, triggering a cascade of sales and an even more brutal drop. According to analyst Rachael Lucas from BTC Markets, $20 billion worth of bitcoins evaporated during this mini "crash" [1].

Speculation and Uncertainty (Gharar) in the Crypto Market

This extreme volatility leads us to question the compliance of cryptocurrency trading with Islamic finance principles. One of the key concepts to consider is Gharar, which refers to uncertainty, ambiguity, or excessive risk in a transaction. In Islam, contracts containing a high level of Gharar are considered invalid.

The cryptocurrency market, particularly Bitcoin’s, is characterized by strong volatility and great uncertainty. Prices can fluctuate unpredictably in very short periods, as demonstrated by the recent crash. This situation can be likened to a form of Gharar, as it is extremely difficult to predict future price movements. Investing in cryptocurrencies then resembles more of a gamble (Maysir), which is forbidden in Islam, than a productive investment.

The use of leverage, which contributed to the recent crash, is another example of Gharar. By borrowing money to invest, traders increase their exposure to risk disproportionately. A slight market drop can lead to colossal losses, even the total loss of the initial investment. This practice clearly contradicts the spirit of Islamic finance, which advocates prudence and moderation.

Riba and Derivative Financial Products in the Crypto Ecosystem

Another fundamental principle of Islamic finance is the prohibition of Riba, which corresponds to interest or usury. Riba is considered a form of exploitation and is strictly prohibited by the Quran.

In the cryptocurrency ecosystem, Riba can manifest in several ways. Leverage, mentioned earlier, often involves paying interest on borrowed sums. Similarly, many trading platforms offer derivative financial products, such as futures contracts or options, which allow speculation on price movements. These products are often based on mechanisms of debt and interest, and are therefore considered non-compliant with Islamic finance.

It is thus crucial for the Muslim investor to be extremely vigilant and avoid platforms and products that involve Riba. It is preferable to focus on spot purchases of cryptocurrencies, without leverage or derivatives.

Towards a More Ethical Crypto Investment

Given these observations, should one completely turn away from cryptocurrencies? Not necessarily. Bitcoin and blockchain technology also present positive aspects that can align with Islamic finance principles. Decentralization, for example, allows bypassing traditional financial intermediaries, who are often the source of unethical practices. The transparency of the blockchain is also an asset, as it allows verification of all transactions in an immutable manner.

Moreover, the increasing regulation of the cryptocurrency sector is good news for Muslim investors. Regulatory frameworks like MiCA in Europe or the GENIUS Act in the United States aim to make the market safer and more transparent, which could reduce Gharar and foster the emergence of products and services more compliant with Islamic ethics.

For the Muslim investor wishing to engage with the cryptocurrency market, here are some practical tips:

Adopt a long-term vision: rather than seeking quick gains through speculation, it is better to invest in solid projects with a long-term outlook.
Avoid leverage and derivative products: these instruments are not only risky but also non-compliant with Islamic finance principles.
Invest only what you can afford to lose: the volatility of the cryptocurrency market is such that it is possible to lose the entire investment. It is therefore essential not to risk funds needed for living expenses.
Do your own research (DYOR): before investing in a cryptocurrency, it is indispensable to learn about the project, its team, its technology, and its development potential.

Conclusion

The recent Bitcoin crash reminds us that the cryptocurrency market is a complex and risky environment. For the Muslim investor, it is essential to approach this market with caution and discernment, keeping in mind the ethical principles of Islamic finance. By avoiding excessive speculation (Gharar) and interest (Riba), and focusing on solid projects and a long-term vision, it is possible to reconcile investing in cryptocurrencies with respect for one’s faith. The growing regulation of the sector and the emergence of new projects focused on ethics and decentralized finance (DeFi) could also open new opportunities for more responsible and Islamically compliant crypto investments.

References

[1] After the Records, the Pullback: Why Bitcoin Is Losing Steam?
[2] Why Is Crypto Up Today? – November 19, 2025
[3] Bitcoin, Ethereum and XRP Set for Rebound? Here's What ...
[4] Crypto Today: Bitcoin, Ethereum, XRP Brace for Deeper Losses as Institutions Pull Back