Crypto Markets Bleed in a Massive Drop Since FTX

Crypto investors just had their worst week in years. A cascade of selling wiped roughly $390 billion from digital asset markets, sending Bitcoin and Ether toward their largest weekly losses since the collapse of FTX in November 2022 [1].

The FTX implosion had been a crisis of trust brought on by fraud at a single exchange. This week was different — it was a broad selloff driven by macro shocks, corporate signals, and money rotating into red-hot AI stocks [3].

Bitcoin fell 17.3% for the week, trading near $60,500. Ether dropped 22% to around $1,550 [1].

The selloff erased a third of the value built since the 2022 bottom. Total crypto market cap sank to about $2 trillion, less than half its October peak of $4.2 trillion [2].

Nearly $7 billion in leveraged trades were liquidated. Long positions took $5.7 billion of the hit. The worst days were Monday and Friday [1].

Strategy’s Symbolic Bitcoin Sale

On Monday, Strategy — the corporate Bitcoin giant formerly known as MicroStrategy, led by Michael Saylor — disclosed it had sold 32 bitcoins worth roughly $2.5 million [3].

The company holds over half a million bitcoins as the largest corporate treasury of the asset and had built its brand on a policy of never selling. This sale was the first since 2022 and only the second ever [3].

Though the amount represented less than 0.004% of Strategy’s total holdings and had been telegraphed weeks earlier, the psychological weight was large. It was the company’s first sale of Bitcoin since 2022 and only the second in its history [3].

Strategy had sold the BTC to fund preferred stock dividend obligations. But the move broke Saylor’s long-standing “never sell your bitcoin” mantra, and markets interpreted it as a crack in the armor of Bitcoin’s most visible institutional champion [3]. The disclosure triggered $594 million in long liquidations within 24 hours [3].

“Who in their right mind would rather buy crypto right now when you could close your eyes, buy a Semiconductor stock and 2-3x your investment in weeks”

ETF Outflows Hit Record Streak

The selling pressure was made worse by an pullback from U.S. spot Bitcoin exchange-traded funds. By Thursday, the ETFs had saw 13 straight days of net outflows — the longest streak on record [3].

Total assets across the ETF complex fell to $82.8 billion from $107.8 billion on May 14, shrinking by $25 billion in under a month [3]. Some ETF issuers saw outflows accelerate despite Bitcoin’s price already sitting 20% below its January highs, suggesting this was more than profit-taking, and looked like a real shift away from crypto [2].

Citi analyst Alex Saunders noted that ETF flows explain roughly 45% of Bitcoin’s weekly price variation [3]. With those flows reversing, the asset lost its primary engine of price support. Vetle Lunde at K33 Research warned the outflows may mark a shift from crypto into AI investments [2].

The AI Factor: Capital Rotation and a Security Shock

The rotation story picked up steam as stocks hit fresh highs. The Nasdaq 100, driven by semiconductor stocks, had been rallying for months. Wolfe Research analyst Rob Ginsberg put it this way: “Who in their right mind would rather buy crypto right now when you could close your eyes, buy a Semiconductor stock and 2-3x your investment in weeks” [3].

Anticipated IPOs from OpenAI, Anthropic, and SpaceX are widely expected to draw further institutional capital away from digital assets [1]. K33 Research’s Lunde described the situation as a widening “opportunity cost of holding BTC” that investors are finding hard to ignore [1]. Saylor partly blamed the selloff on money rotating into AI stocks [5].

Citi’s Saunders struck a careful note: “We expect sentiment to remain lackluster, especially as the divergence with equity performance remains stark, absent positive news on the regulatory front or de-basement trade fears around fiscal position” [3].

An even more direct AI-crypto collision came when researchers used Anthropic’s latest large language model to uncover a critical vulnerability in Zcash’s Orchard privacy protocol — a bug that had gone undetected for four years [1]. Zcash’s token collapsed more than 40% as a result, raising broader questions about AI’s ability to expose flaws in cryptographic systems [4].

Jobs Report Resets Rate Expectations

Friday brought the week’s sharpest selloff, triggered by a stronger-than-expected U.S. nonfarm payrolls report. The data killed any remaining hopes of a Federal Reserve rate cut and flipped market expectations toward a potential rate hike by the end of 2026.

May added 172,000 jobs versus the 85,000 forecast, rewriting the rate timeline [4]. Swap markets had been betting on cuts under the new Fed chair. They now price a hike [4]. — a complete reversal from the easing cycle markets had been pricing under newly confirmed Fed Chair Kevin Warsh [4].

The reaction hit every corner of the market. Two-year Treasury yields jumped 12 basis points to 4.16%.

The Nasdaq 100 sank roughly 5%, its worst session since the tariff-driven selloff of April 2025. The S&P 500 fell 2.6% [4].

All risk assets fell together, and crypto went with them. Bitcoin briefly hit $59,227 before buyers pushed it back above $61,000 [4].

The $60,000 Line in the Sand

The $60,000 level was widely seen as a key level well before the week’s events. It is both a psychological barrier and a technical one: the price where many institutional buyers accumulated positions over the past year. Deribit, the leading crypto derivatives exchange, reported over $1.2 billion in notional open interest at the $60,000 strike put options alone, the most hedged level in the market [5].

Jean-David Péquignot at Deribit explained that market makers are short those puts. As Bitcoin nears $60,000, they must sell more BTC or futures to hedge.

That can speed up any drop below that level [5]. He warned that with leverage still in the system, a break below $60K could set off more forced liquidations [5].

Adding to the pressure, big buyers had piled into BTC between $60K and $67K. With prices now at or below their entry point, many must choose between holding at a loss or moving cash to assets that are rising [5].

Altcoins Get Crushed

The bleeding was not confined to the two largest cryptocurrencies. Solana dropped 23.7% for the week.

“We expect sentiment to remain lackluster, especially as the divergence with equity performance remains stark, absent positive news on the regulatory front or de-basement trade fears around fiscal position”

XRP, Dogecoin, and BNB each fell between 13% and 20%. Ether’s 22% decline put it below $1,600.

Hyperliquid, which had outperformed during the earlier phases of the selloff, surrendered 9.9% [4].

Cardano hit $0.16, down 75% over the past year, after founder Charles Hoskinson warned of a “wave of failures” [4].

Analysts at Standard Chartered speculated that Strategy would need to become an aggressive buyer again — potentially purchasing 10 to 100 times the amount it sold — to restore market confidence [3].

What Comes Next

Total liquidations hit $1.6 billion in the final 24 hours. Over 308,000 traders were caught the wrong way [4].

Bitcoin pierced $60,000 briefly then reclaimed it. The question now is whether it holds or breaks on a retest.

A clean break below $60K would send BTC back to levels last seen in February [4].

Long-term holders mostly stayed put. On-chain data showed little selling from wallets that held BTC for over a year. The panic was in short-term leveraged positions, not the core believer base [1].

Wolfe Research still follows the four-year crypto cycle. It has an average peak-to-trough span of 381 days and an average drop of 79%.

Its model points to a bottom below $40,000 around late October [3]. Whether this week’s rout marked the capitulation that often accompanies market bottoms, or was merely the latest episode in a longer downtrend, may depend on the broader macro picture — and on whether the flows that powered crypto’s rise return, or move permanently toward new frontiers.