Bitcoin and ether are set for their most significant weekly decline since the FTX fallout in November 2022. The crypto market witnessed a staggering $390 billion loss in value, alongside nearly $7 billion in liquidated leveraged positions. Factors such as heavy ETF outflows, Strategy’s bitcoin sale, rising competition from AI investments, and fears of Federal Reserve rate hikes negatively impacted crypto throughout the week. Investors faced one of their most challenging weeks in years, as a selling frenzy erased hundreds of billions from digital asset markets. Despite a slight recovery on Saturday, both BTC and ETH remained close to their lows, with BTC just above $60,000 and ETH around $1,550. The damage extended to the broader digital asset market, which saw a drop of approximately $390 billion in value, reducing total market capitalization to just above $2 trillion, significantly below the nearly $4.2 trillion peak in October. The turmoil wasn’t limited to prices; crypto derivatives traders experienced one of the year’s most substantial losses, with around $7 billion in leveraged positions liquidated during the week, particularly on Monday and Friday. About $5.7 billion of these were long positions, reflecting bullish expectations for rising prices. The selloff was triggered by a convergence of bearish pressures. At the week’s start, Strategy (MSTR), the largest corporate bitcoin holder, revealed its first BTC sale in nearly four years, amounting to only 32 BTC valued at roughly $2.5 million. This sale unsettled investors who had seen Michael Saylor’s firm as a constant source of demand. Questions arose about whether Strategy might need to sell more bitcoin to cover obligations related to its expanding preferred equity holdings. Simultaneously, bitcoin ETFs continued to experience significant outflows, with K33 Research head Vetle Lunde suggesting that these outflows indicated a broader shift of capital away from crypto towards artificial intelligence (AI) investments. As AI stocks reached record highs and investors anticipated IPOs from firms like OpenAI, Anthropic, and SpaceX, the opportunity cost of holding BTC became increasingly apparent to some investors. Concerns about AI’s potential to identify weaknesses in crypto protocols also compounded the pressure. Zcash (ZEC), a leading cryptocurrency earlier this year, plummeted over 40% after researchers utilized Anthropic’s latest AI model to reveal a critical flaw in the network’s privacy system. The final blow was dealt by Friday’s unexpectedly strong U.S. jobs report, prompting investors to reassess the Federal Reserve’s forthcoming actions. Markets that had previously anticipated rate cuts are now increasingly predicting that the central bank might raise rates if inflation remains persistently high. U.S. Treasury bond yields surged, and the Nasdaq 100 experienced its worst day since the tariff-driven selloff in April 2025, interrupting a record-setting rally that had driven much of Wall Street’s optimism this year. For the moment, the selling seems to have paused with traditional markets closed for the weekend and crypto prices stabilizing on Saturday. Whether this week’s downturn represents the capitulation often seen at market bottoms or is simply another chapter in the ongoing downtrend may hinge on the broader macroeconomic landscape. Elevated bond yields, concerns over rate hikes, and ongoing competition from AI investments and IPOs are significant obstacles to recovery.