Crypto investors faced one of their most challenging weeks in recent memory, as a significant wave of selling resulted in a staggering loss of hundreds of billions of dollars across digital asset markets. Bitcoin (BTC) experienced a sharp decline, dropping 17.3% to trade just above $60,000, while ether (ETH) fell even further, declining by 22% and hovering around $1,550. Both cryptocurrencies are now on track for their most substantial weekly declines since November 2022, when the market was reeling from the fallout of the FTX exchange collapse.
The broader digital asset market was similarly affected, with nearly $390 billion wiped from its total value during the week. This left the overall market capitalization at just above $2 trillion, a stark drop from the nearly $4.2 trillion peak reached in October.
The selloff extended beyond just Bitcoin and Ethereum, inflicting heavy losses on crypto derivatives traders as well. Approximately $7 billion in leveraged positions were liquidated, with the most significant flushes occurring on Monday and Friday—$5.7 billion of this total involving long positions, which are bets that prices would rise.
Several factors converged to trigger this dramatic downturn. The week began with news that MicroStrategy (MSTR), the largest corporate holder of Bitcoin, had sold BTC for the first time in nearly four years. Although the sale involved a relatively small amount—just 32 BTC valued at approximately $2.5 million—it unsettled investors who had perceived the company as a steady source of demand.
Questions arose regarding MicroStrategy’s potential need to sell further Bitcoin to cover rising obligations tied to its growing stack of preferred equities. Compounding concerns, Bitcoin exchange-traded funds (ETFs) saw outflows as investors shifted capital towards artificial intelligence (AI) investments—a trend highlighted by K33 Research’s head, Vetle Lunde. As AI-related stocks soared to record highs, with upcoming IPOs from companies like OpenAI, Anthropic, and SpaceX on the horizon, investors began to find the “opportunity cost of holding BTC” increasingly difficult to justify.
Adding further pressure, Zcash (ZEC)—which had previously performed well—plummeted more than 40% after researchers used Anthropic’s latest AI model to reveal a significant vulnerability in its privacy system.
The situation reached a critical point on Friday when a stronger-than-expected U.S. jobs report led investors to reconsider the Federal Reserve’s possible actions. Markets that had previously anticipated rate cuts began shifting their expectations, now bracing for potential rate hikes if inflation remains persistently high. This shift resulted in a surge in U.S. Treasury bond yields and forced the Nasdaq 100 to endure its worst day since the tariff-driven selloff in April 2025, disrupting a record-setting rally that had bolstered investor enthusiasm throughout the year.
As the weekend began, selling pressure appeared to moderate, with traditional markets closing and crypto prices stabilizing. The question now remains: will this week’s drastic selloff serve as the capitulation often seen at market bottoms, or is it simply the latest episode in an ongoing downward trend? Investors are left to navigate a challenging macroeconomic landscape, characterized by rising bond yields, rate-hike fears, and increasing competition from AI investments and IPOs—key hurdles for any potential recovery.
