Cryptocurrency investors endured one of the toughest weeks in years as a sell-off wiped out hundreds of billions of dollars from digital asset markets.
bitcoin fell 17.3% this week, while ether (ETH) fell 22%, putting both assets on track for their biggest weekly declines since November 2022, when the collapse of Sam Bankman-Fried’s FTX exchange triggered market-wide panic.
Despite a modest stabilization on Saturday, both assets remained near their lows, with BTC trading just above $60,000 and ETH changing hands around $1,550.
The damage extended far beyond the two largest cryptocurrencies. The digital asset market lost approximately $390 billion in value over the week, leaving the total market capitalization hovering around $2 trillion, according to data from TradingView. That’s less than half the peak of nearly $4.2 trillion reached in October.
It wasn’t just prices that were affected. Crypto derivatives traders suffered one of the biggest losses this year.
According to data from CoinGlass, approximately $7 billion in leveraged positions in digital assets were liquidated during the week, with Mondays and Fridays seeing the most severe surges.
About $5.7 billion of them were long positions or bullish bets on higher prices.
Why cryptocurrencies crashed this week
The sell-off occurred when several bearish forces converged at once.
As of the week, Strategy (MSTR), the largest corporate holder of bitcoin, revealed that it sold BTC for the first time in almost four years. The transaction was insignificant (just 32 BTC worth about $2.5 million), but the sale shook investors who had long seen Michael Saylor’s company as a perpetual source of demand.
Investors also began to wonder if Strategy might need to sell additional bitcoin to help cover obligations tied to its growing stack of preferred stock.
At the same time, bitcoin ETFs continued to lose assets. K33 Research head Vetle Lunde argued earlier this week that some of those outflows reflected a broader rotation of capital out of cryptocurrencies toward investments in artificial intelligence (AI).
With AI-related stocks hitting record highs and investors anticipating potential IPOs from companies like 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 cryptographic protocols also added to the pressure. Zcash (ZEC), one of the best-performing cryptocurrencies earlier this year, fell more than 40% after researchers used Anthropic’s latest AI model to discover a critical vulnerability in the network’s privacy system.
The final blow came with Friday’s better-than-expected U.S. jobs report, forcing investors to rethink the Federal Reserve’s next move. Markets that earlier this year anticipated rate cuts now increasingly expect the central bank to raise rates if inflation remains persistently high.
U.S. Treasury yields rose, while the Nasdaq 100 suffered its worst day since the tariff-induced selloff in April 2025, snapping a record rally that had fueled much of Wall Street’s enthusiasm this year.
For now, sales appeared to have stopped with traditional markets closed over the weekend and cryptocurrency prices stabilizing on Saturday.
Whether this week’s decline marked the capitulation that often occurs at lower market levels or was simply the latest episode of the downtrend may depend on the broader macroeconomic picture. Higher bond yields, fears of rate hikes and continued competition from AI investments and IPOs remain key obstacles to the recovery.
