Crypto markets suffered their sharpest weekly decline in nearly four years as Bitcoin plunged 17.3% and ether fell 22%, wiping $390 billion from the digital asset space. According to reporting by CoinDesk, the losses marked the worst weekly performance for both assets since November 2022, when the FTX collapse triggered a market-wide panic.

By Saturday, Bitcoin was trading just above $60,000 while ether hovered near $1,550. The broader market capitalization dropped to just above $2 trillion—roughly half the $4.2 trillion peak reached in October.

Derivatives Traders Face Liquidation Carnage

The damage extended beyond price action into the futures markets. Roughly $7 billion in leveraged positions were liquidated across digital assets during the week, with Monday and Friday delivering the most severe flushes. Of that total, $5.7 billion represented long positions—bullish bets on higher prices that turned catastrophically wrong.

For traders holding leveraged long exposure, the week served as a brutal reminder of the risks inherent in using borrowed capital in volatile markets.

A Perfect Storm of Bearish Catalysts

The selling didn’t emerge from a single cause. Rather, several headwinds converged simultaneously to spark the rout.

Early in the week, MicroStrategy (MSTR)—the largest corporate holder of Bitcoin—disclosed its first BTC sale in nearly four years. The transaction was modest by any measure: just 32 Bitcoin worth approximately $2.5 million. Yet the symbolic weight proved damaging. Michael Saylor’s company had become synonymous with unrelenting Bitcoin accumulation, and the sale triggered investor concerns about whether forced liquidations might follow.

Market participants also began questioning whether MSTR’s mounting preferred equity obligations might eventually force additional Bitcoin sales to meet debt servicing requirements.

Simultaneously, Bitcoin ETFs continued bleeding assets as institutional capital rotated elsewhere. K33 Research head Vetle Lunde attributed some of those outflows to a broader reallocation toward artificial intelligence investments, which were reaching record highs amid IPO anticipation from companies like OpenAI and Anthropic.

“The opportunity cost of holding BTC has become increasingly difficult for some investors to ignore,” Lunde noted, as AI-related equities posted gains that overshadowed Bitcoin’s performance.

AI Risk and Rising Rate Expectations

A separate threat emerged from an unexpected quarter: artificial intelligence itself. Researchers used Anthropic’s latest language model to identify critical vulnerabilities in Zcash’s privacy system, sending the privacy-focused cryptocurrency tumbling more than 40%. The disclosure raised broader questions about whether advanced AI could expose flaws in other crypto protocols.

The week’s final blow came Friday when the U.S. jobs report came in stronger than expected. Markets that had anticipated Federal Reserve rate cuts earlier in 2026 rapidly recalibrated expectations. The possibility of rate hikes if inflation persisted suddenly looked plausible again.

U.S. Treasury bond yields surged while the Nasdaq 100 posted its worst day since the tariff-driven selloff in April 2025. The sell-off snapped a record-setting rally that had fueled much of Wall Street enthusiasm through the first half of the year.

What’s Next for Bitcoin Recovery

The selling paused over the weekend as traditional markets closed, allowing Bitcoin prices to stabilize modestly. Whether this week’s rout constitutes capitulation—a marker of potential bottoms—or merely another chapter in a prolonged downtrend remains unclear.

Higher bond yields, lingering rate-hike concerns, and sustained competition from AI investments and upcoming IPOs present formidable obstacles to any near-term recovery. The path forward for Bitcoin depends largely on whether the macro picture shifts materially in coming weeks.