This week delivered a brutal blow to crypto: Bitcoin dropped 17% to around $61,000, while Ethereum plunged 22% to approximately $1,560, the worst weekly performance since the FTX collapse in November 2022. The total crypto market cap evaporated nearly $400 billion, falling to roughly $2 trillion — less than half its peak from last October.
No single trigger explains the rout, but four negative signals converged to amplify volatility.
Strategy Sells Bitcoin for the First Time in Four Years
Michael Saylor's Strategy disclosed a Bitcoin sale of just 32 coins (about $2.5 million) in a recent SEC filing. Although insignificant against the company's 500,000+ BTC holdings, the move shattered the firm's long-standing "never sell" narrative. Investors now question whether future obligations — preferred stock, convertible bonds, and cost basis — could force more sales. Uncertainty gets priced in before answers emerge.
ETF Outflows Redirected to AI
Spot Bitcoin ETFs have suffered persistent outflows this week. Vetle Lunde, head of research at K33, noted that institutional capital is actively rotating from crypto into AI. Companies like OpenAI, Anthropic, and SpaceX are gearing up for IPOs or private funding rounds, competing for the same institutional funds. This rivalry may prove structural: the AI capital cycle is entering its most capital-intensive phase.
Zcash Crashes 50% After AI Exposes Privacy Flaw
The week's worst-performing major asset was privacy coin Zcash (ZEC), which crashed over 50%. The trigger: researchers used Anthropic's latest AI model to find a critical vulnerability in Zcash's privacy system. The incident's symbolic weight far exceeds Zcash's market cap. If AI can systematically scan and break cryptographic assumptions, the entire privacy coin segment faces a credibility crisis. Markets sold first, asked questions later.
Strong Nonfarm Payrolls Rekindle Rate Hike Fears
Friday's U.S. nonfarm payrolls beat expectations, shattering the consensus that the Fed would cut rates in 2026. Bond yields surged, hammering the Nasdaq 100. A strong labor market is normally a positive sign, but in the current context it suggests inflation may cool slower than anticipated, putting rate hikes back on the table. Higher interest rates create structural headwinds for risk assets, and crypto — highly sensitive to liquidity — feels the pain first.