Crypto sheds $390 billion as bitcoin, ether post worst week since FTX collapse

Digital asset markets endured one of their sharpest weekly contractions in years, with bitcoin and ether on track for their largest declines since the November 2022 collapse of Sam Bankman-Fried's FTX exchange. Bitcoin fell 17.3% over the week while ether ($ETH) dropped 22%, leaving $BTC trading just above $60,000 and $ETH around $1,550 after a modest stabilization on Saturday. The total cryptocurrency market capitalization fell by roughly $390 billion during the week to just above $2 trillion, according to TradingView data, less than half the nearly $4.2 trillion peak reached in October.

The selloff extended across derivatives markets, where roughly $7 billion in leveraged positions were liquidated across digital assets during the week, according to CoinGlass data. Monday and Friday delivered the most severe flushes, with about $5.7 billion of the total coming from long positions, or bullish bets on higher prices.

Several factors converged to drive the move lower. Strategy (MSTR), the largest corporate holder of bitcoin, disclosed it sold $BTC for the first time in nearly four years, offloading 32 bitcoin worth roughly $2.5 million. The transaction was small, but it unsettled investors who had long viewed Michael Saylor's company as a steady source of demand, and prompted questions about whether Strategy may need to sell additional bitcoin to cover obligations tied to its preferred equities. Spot bitcoin ETFs continued to see outflows during the same period, with K33 Research head Vetle Lunde arguing that some of the redemptions reflected a broader rotation of capital into artificial intelligence investments. With AI-related stocks pushing to record highs and investors anticipating potential IPOs from companies such as OpenAI, Anthropic and SpaceX, "the opportunity cost of holding $BTC has become increasingly difficult for some investors to ignore," Lunde said.

Concerns about AI's ability to expose flaws in crypto protocols also weighed on sentiment. Zcash (ZEC), one of the best-performing cryptocurrencies earlier this year, tumbled more than 40% after researchers used Anthropic's latest AI model to uncover a critical vulnerability in the network's privacy system. The week ended with Friday's stronger-than-expected U.S. jobs report, which prompted a repricing of Federal Reserve policy expectations. Markets that earlier this year had anticipated rate cuts increasingly expect the central bank could hike if inflation remains stubbornly high, sending U.S. Treasury bond yields sharply higher and pulling the Nasdaq 100 to its worst day since the April tariff-driven selloff.