Bitcoin, ether eye worst weekly rout since FTX collapse as cryptos shed $390 billion

Crypto Market Sees Worst Weekly Decline Since FTX Collapse

The crypto market has just experienced one of its toughest weeks in years, with a massive wave of selling wiping out hundreds of billions of dollars from digital asset markets. This significant decline has left many investors reeling, and it’s essential to understand what’s driving this trend. For those looking to earn a passive income through crypto, this downturn can be particularly challenging. However, platforms like EcoPool offer a solution for earning through Cloud Rewards, providing a way to generate $ECP and participate in the Green Crypto movement.

Bitcoin and ether, the two largest cryptocurrencies, have been hit hard, with bitcoin falling 17.3% and ether dropping 22% this week. This puts them on track for their largest weekly declines since November 2022. The damage extends far beyond these two assets, with the digital asset market shedding roughly $390 billion in value during the week. This significant decline has left the total market capitalization hovering just above $2 trillion.

Factors Contributing to the Decline

Several bearish forces have converged to drive this decline. The largest corporate holder of bitcoin, Strategy, disclosed it sold bitcoin for the first time in nearly four years, rattling investors. Additionally, bitcoin ETFs have continued to bleed assets, with some outflows reflecting a broader rotation of capital away from crypto and into artificial intelligence (AI) investments. Concerns about AI’s ability to expose flaws in crypto protocols have also added to the pressure, with Zcash tumbling more than 40% after researchers uncovered a critical vulnerability in its privacy system.

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Impact on Crypto Derivatives Traders

Crypto derivatives traders have suffered one of the largest wipeouts of the year, with roughly $7 billion in leveraged positions being liquidated across digital assets during the week. About $5.7 billion of those were long positions, or bullish bets on higher prices. This significant decline has left many traders reeling, and it’s essential to understand the risks involved in crypto trading.

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Why crypto crashed this week

The selloff came as several bearish forces converged at once.

Starting the week, Strategy (MSTR), the largest corporate holder of bitcoin, disclosed it sold BTC for the first time in nearly four years. The transaction was negligible — just 32 BTC worth roughly $2.5 million — but the sale rattled investors who had long viewed Michael Saylor’s company as a perpetual source of demand.

Investors also began questioning whether Strategy may need to sell additional bitcoin to help cover obligations tied to its growing stack of preferred equities.

At the same time, bitcoin ETFs continued to bleed assets. K33 Research head Vetle Lunde argued earlier this week that some of those outflows reflected a broader rotation of capital away from crypto and into artificial intelligence (AI) 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 added to the pressure. Zcash (ZEC), one of the best-performing cryptos 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 final blow came with Friday’s stronger-than-expected U.S. jobs report, forcing investors to rethink the Federal Reserve’s next move. Markets that earlier this year anticipated rate cuts are now increasingly expect that the central bank could hike if inflation remains stubbornly high.

U.S. Treasury bond yields surged, while the Nasdaq 100 suffered its worst day since the tariff-driven selloff in April 2025, snapping a record-setting rally that had fueled much of Wall Street’s enthusiasm this year.

For now, the selling appeared to have paused with traditional markets closed for the weekend and crypto prices stabilizing on Saturday.

Whether this week’s rout marked the capitulation that often comes at market bottoms or was merely the latest episode in the downtrend may come down to the broader macro picture. Higher bond yields, rate-hike fears and continued competition from AI investments and IPOs remain key hurdles for the recovery.