Bitcoin and Ether Face Critical Price Levels in Worst Week Since July 2024

The cryptocurrency market is undergoing a severe downturn, marking its most difficult week since July 2024. Bitcoin and Ether are nearing critical support levels, influenced by external factors such as a security exploit affecting Zcash and shifts in investment towards artificial intelligence.

Bitcoin, currently priced around $62,500, has fallen over 14.5% this week, while Ether has experienced a steeper decline of more than 17%, including a 5.5% drop just on Friday. Ether is approaching the crucial support level of $1,420, a point it previously rebounded from in April 2025. A breach below this level could signal a return to bear market conditions reminiscent of 2022, when prices fell below $900.

The broader altcoin market has also felt the impact of this week's events, particularly Zcash, which plummeted more than 30% after a vulnerability was disclosed that could allow for unlimited token creation. This has triggered sell-offs in other privacy coins like Monero and Dash. Additionally, prominent investor Arthur Hayes revealed that his firm has sold off its entire ZEC position, compounding the negative sentiment.

Market Trends and Derivative Movements

• Bitcoin's value has dropped nearly 15% over the past week, coinciding with the lowest monthly spot trading volume since October 2023.
• Michael Saylor, Executive Chairman of Strategy (MSTR), attributes part of the market's decline to a capital rotation linked to recent AI IPOs in the United States.
• On-chain analysts are noting a significant decrease in spot crypto trading volume, which fell to $679 billion in April.

Derivatives Market Overview

• The positioning in Bitcoin derivatives has shifted to a clear deleveraging phase, with open interest declining by 15% to $17 billion and funding rates turning negative across various platforms.
• On Deribit, the funding rate has dropped to -15% annualized, contrasting sharply with previous positive trends, while the three-month annualized basis has slightly decreased from 2.9% to 2.7%, indicating waning institutional risk appetite.
• The options market has adopted a defensive stance, with a balanced put/call volume ratio over the last 24 hours and a significant increase in demand for downside protection, as shown by a rise in the one-week 25-delta skew from 13% to 27%.
• Front-end implied volatility has surged to 47, highlighting continued interest in hedging amidst the broader market deleveraging.
• Coinglass reports that liquidations reached $1.2 billion within a 24-hour period, primarily affecting long positions, with Bitcoin leading at $364 million, followed by Ether at $291 million and Zcash at $107 million.
• Key liquidation levels for Bitcoin are being closely monitored, particularly the $60,900 mark.

Impacts on Altcoins

• The fallout from Zcash's issues has negatively affected other privacy coins, with Monero losing 12% and Dash down 9% this week.
• Arthur Hayes's announcement about liquidating his firm's ZEC holdings has further pressured Zcash's price.
• Cardano has also seen a decline of over 10% following its founder's comments about needing a break due to ecosystem concerns.
• Tokens related to AI have lost traction, with declines of 4%-6% for FET, NEAR, and TAO, despite earlier gains.
• However, there is a potential silver lining for altcoin investors, as the average relative strength index (RSI) across crypto pairs indicates that many are in "oversold" territory, suggesting a possible recovery rally this weekend.