The crypto market experienced a rare concentrated sell-off this week. Both Bitcoin and Ethereum posted their largest weekly declines since the FTX collapse in November 2022, triggering a significant decline in the overall digital asset market capitalization and widespread liquidations of leveraged positions.
Market capitalization dropped by approximately $390 billion over the week.
As of the weekend, Bitcoin fell 17.3% this week to above $61,000; Ethereum dropped 22% to around $1,550. Although prices stabilized slightly on Saturday, both remain near their weekly lows.
According to TradingView data, the digital asset market lost approximately $390 billion this week, with total market capitalization falling back above $2 trillion, a significant contraction from the peak of nearly $4.2 trillion in October last year.
Leveraged long positions became the primary losers.
In addition to the price decline, the derivatives market has also seen significant deleveraging. According to CoinGlass data, approximately $7 billion in leveraged positions across the digital asset market were liquidated this week, with about $5.7 billion of those being long positions. Monday and Friday were the two trading days with the highest concentration of liquidations.
This means that capital previously bet on further price increases was quickly forced out during the decline, further amplifying market volatility.
ETF outflows and macro expectations are jointly pressuring
This pullback was not triggered by a single event, but rather by multiple negative factors accumulating in a short period. At the start of the week, publicly traded company Strategy disclosed its first sale of Bitcoin in nearly four years. Although the sale amounted to only 32 bitcoins, approximately $2.5 million, it still dampened investor expectations of continued buying.
The market then began to focus on whether the company might continue selling Bitcoin in the future to cover related obligations as the preferred stock financing under Strategy expands. This concern further weighed on market sentiment.
Meanwhile, Bitcoin spot ETFs continue to experience outflows. Vetle Lunde, Research Director at K33 Research, previously noted that some of these outflows may reflect a shift of capital from crypto assets to AI-related investments.
AI security incidents and rising U.S. Treasury yields intensify volatility
Another notable event this week came from Zcash. After researchers discovered a critical vulnerability in the network’s privacy system using Anthropic’s latest AI model, ZEC dropped more than 40%. This incident has also intensified market concerns about the security of certain cryptocurrency protocols.
Stronger-than-expected U.S. employment data released on Friday further pressured risk assets. Following the data release, markets reassessed the Fed’s policy path, with expectations for rate cuts this year weakening and some even pricing in the possibility of another rate hike if inflation proves persistent.
As a result, U.S. Treasury yields rose, and the Nasdaq 100 index also declined significantly. With risk appetite cooling in traditional markets, crypto assets came under corresponding pressure.
As of the weekend, with U.S. stock markets closed, selling pressure temporarily eased, and major crypto assets saw short-term stabilization, though prices remain near this week’s lows.