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PENGU Experiences Significant Price Decline in November 2025: An Analysis of Systemic Risk and Regulatory Oversight

PENGU Experiences Significant Price Decline in November 2025: An Analysis of Systemic Risk and Regulatory Oversight

Bitget-RWA2025/11/09 20:56
By:Bitget-RWA

- PENGU's 2025 price crash highlighted systemic risks in crypto, driven by regulatory tightening, DeFi exploits, and shifting investor sentiment. - U.S. GENIUS Act and EU MiCA regulations increased compliance costs, while FATF rules restricted liquidity for speculative tokens. - A $128M Balancer DeFi exploit triggered cascading failures, exposing vulnerabilities in interconnected protocols and accelerating PENGU's collapse. - Whale-driven short positions and retail investor panic amplified downward pressur

The unpredictable nature of the cryptocurrency market has always presented both significant opportunities for profit and considerable risks, rewarding daring investors while exposing weaknesses for those less prepared. In November 2025, the speculative token

became a prime example of this dynamic, experiencing a sharp decline in value as a result of stricter regulations, vulnerabilities in DeFi, and changing investor attitudes. This article examines how these elements interacted, illustrating the particular vulnerability of speculative crypto assets to chain-reaction risks in a climate of increasing oversight.

Regulatory Tightening: Heightened Pressure on Speculative Tokens

The introduction of the U.S. GENIUS Act in July 2025 represented a major change in the regulation of stablecoins, requiring issuers to fully back their coins with secure assets and maintain a one-to-one dollar value, as detailed in a

. Although the law aimed to bring stability to the crypto sector, it unintentionally revealed weaknesses in DeFi lending platforms, where unchecked leverage and asset reuse are common, according to BP Insights. At the same time, the Financial Action Task Force (FATF) Travel Rule, now enforced in 85 out of 117 regions, placed tough data-sharing requirements on Asset Service Providers (VASPs), further limiting liquidity for speculative coins such as PENGU, as noted in a . While these regulations are intended to combat illegal activity, they have also created a regulatory burden that increases market instability.

The European Union’s Markets in Crypto-Assets (MiCA) regulation, which took effect in late 2024, added further complexity. By enforcing broad compliance standards, MiCA has forced smaller, speculative projects to either comply or exit important markets, as highlighted in a

. While this may support long-term market health, it has also raised the stakes for tokens like PENGU that lack strong institutional support.

Market Sentiment: Large Holders and the Move Toward Stability

Investor attitudes shifted dramatically in November 2025, largely influenced by the moves of major holders. For example, a $11 billion

whale opened a $235 million short position, reflecting a pessimistic outlook amid broader economic challenges like U.S. government shutdowns and trade policy uncertainty, as reported in a . This whale’s decision to transfer Bitcoin to new wallets and exchanges sparked a surge in short-term selling, deepening losses for speculative cryptocurrencies.

Meanwhile, individual investors faced significant challenges. One particularly tragic incident involved a young trader who lost their family’s savings on an altcoin similar to PENGU, highlighting the emotional and financial dangers of speculative investing, as described in a

. Such stories, widely shared on social media, accelerated the trend of investors pulling out of smaller tokens in favor of safer assets like Bitcoin and .

Systemic Risks: DeFi Vulnerabilities and Chain Reactions

The immediate trigger for PENGU’s downfall was the

DeFi hack on November 3, 2025, which siphoned $128.6 million from liquidity pools across several blockchains, according to a . This exploit, which took advantage of flaws in smart contract code, set off a cascade of events: stablecoins like lost their peg, and platforms such as Stream Finance suffered $93 million in losses, as reported by . The interconnected nature of DeFi meant that even though PENGU was not directly involved in the exploit, it still faced a severe liquidity shortage as investors rushed to withdraw their funds.

Back in October 2025, the European Systemic Risk Board (ESRB) had already warned about these dangers, noting that stablecoins issued by multiple entities and cross-chain operations could threaten the stability of traditional finance, according to a

. The Balancer hack confirmed these fears, with the total value locked (TVL) in DeFi dropping by $42 billion in its wake, as noted in a . Speculative tokens like PENGU, lacking substantial backing or practical use, were especially exposed to panic-driven sell-offs.

PENGU Experiences Significant Price Decline in November 2025: An Analysis of Systemic Risk and Regulatory Oversight image 0

Looking Forward: Addressing Systemic Vulnerabilities

Regulators and industry players are now working quickly to tackle these systemic issues. The Commodity Futures Trading Commission (CFTC) has advocated for oversight of crypto spot markets, using its current legal powers to address regulatory blind spots, as mentioned in a

. At the same time, platforms like RedStone’s Credora are becoming more popular, providing real-time credit risk analysis for DeFi protocols, according to a .

For those investing in crypto, the message is unmistakable: speculative digital assets carry significant risks, especially in an environment where regulatory and technical shocks can lead to rapid losses. While innovation in DeFi and

tokens will continue, the events of November 2025 highlight the importance of caution, diversification, and close attention to systemic connections.

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