A week beginning with Strategy's bitcoin sale culminated in one of the largest drawdowns in the crypto market in years.
By Krisztian Sandor|Edited by Nikhilesh De Jun 6, 2026, 7:58 p.m. 3 min readMake preferred on (Josep Castells/Unsplash)Key Points:
- Bitcoin and ether are experiencing their worst weekly losses since the FTX collapse in November 2022, marking a challenging week for crypto markets.
- Approximately $390 billion was wiped from the crypto market, with nearly $7 billion in leveraged positions liquidated.
- Factors such as significant ETF outflows, Strategy's bitcoin sale, heightened competition from AI investments, and concerns over Federal Reserve interest rate hikes contributed to this downturn.
Investors in the cryptocurrency space faced one of their most difficult weeks in recent memory as a significant sell-off led to a loss of hundreds of billions in market value.
Bitcoin BTC$60,583.08 saw a decline of 17.3% this week, while ether (ETH) fell by 22%. These drops put both cryptocurrencies on track for their largest weekly losses since the November 2022 incident involving the collapse of Sam Bankman-Fried's FTX exchange, which caused widespread panic.
Despite a slight recovery on Saturday, both cryptocurrencies remained near their lows, with BTC trading just above $60,000 and ETH priced around $1,550.
The overall impact extended beyond just these two leading cryptocurrencies. The digital asset market lost around $390 billion in value over the week, resulting in a total market capitalization just above $2 trillion, as reported by TradingView. This figure is less than half of the nearly $4.2 trillion peak seen in October.
Notably, it was not solely the prices that were affected; crypto derivatives traders experienced one of the largest liquidations of the year.
Approximately $7 billion in leveraged positions were liquidated across the digital asset sector during the week, according to CoinGlass data, with the most severe sell-offs occurring on Monday and Friday.
Of this amount, around $5.7 billion involved long positions, which are bets on rising prices.
Crypto liquidations through 2026 (CoinGlass)Reasons Behind This Week's Crypto Crash
The market downturn was driven by several converging bearish factors.
At the start of the week, Strategy (MSTR), the largest corporate bitcoin holder, revealed it sold BTC for the first time in nearly four years. Although the sale was small — just 32 BTC valued at roughly $2.5 million — it unsettled investors who had previously viewed Michael Saylor's company as a consistent buyer.
Concerns also arose about whether Strategy might need to sell more bitcoin to meet obligations linked to its increasing amount of preferred equity.
Simultaneously, bitcoin ETFs continued to experience significant asset outflows. K33 Research's Vetle Lunde noted that some of these outflows were indicative of a broader shift in capital away from crypto and towards AI investments.
With AI stocks reaching all-time highs and speculation surrounding potential IPOs from firms like OpenAI, Anthropic, and SpaceX, Lunde stated that "the opportunity cost of holding BTC" is becoming increasingly significant for many investors.
Additionally, worries about AI revealing vulnerabilities in crypto protocols heightened the pressure. Zcash (ZEC), which had been one of the better-performing cryptocurrencies earlier this year, plummeted over 40% after researchers utilized Anthropic's AI model to identify a critical flaw in its privacy system.
The final nail in the coffin was a stronger-than-expected U.S. jobs report released on Friday, prompting investors to reassess the Federal Reserve's potential actions. Markets that had anticipated rate cuts earlier this year are now increasingly leaning towards the possibility of rate hikes if inflation remains persistently high.
U.S. Treasury bond yields surged, and the Nasdaq 100 experienced its worst day since the tariff-related sell-off in April 2025, interrupting a record-setting rally that had been a key driver of optimism on Wall Street this year.
Currently, the sell-off seems to have paused with traditional markets closed for the weekend, and crypto prices appeared to stabilize on Saturday.
Whether this week's downturn represents a capitulation typical of market bottoms or if it is just another phase in the ongoing downtrend may depend on the broader macroeconomic landscape. Challenges such as rising bond yields, fears of rate hikes, and persistent competition from AI investments and upcoming IPOs remain significant obstacles to recovery.
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