Bitcoin and ether posted their worst weekly performance since the FTX collapse in November 2022, as the broader crypto market shed roughly $390 billion in value over seven days. The sell-off hit major assets hard, with BTC and ETH experiencing steep declines that rippled through altcoins and DeFi tokens alike.
The week began with a significant catalyst: Grayscale's bitcoin sale, which flooded markets with BTC supply just as sentiment deteriorated. The timing collided with broader macro headwinds. Rising bond yields, persistent inflation concerns, and renewed rate hike expectations from the Federal Reserve pressured risk assets across equities and crypto simultaneously. The S&P 500 also posted losses, signaling a flight to safety that extended beyond digital assets.
On-chain metrics reflected capitulation. Long liquidations spiked on major derivatives exchanges as leveraged traders faced margin calls. Bitcoin volatility expanded sharply, with intraday swings exceeding 5 percent. Ether followed a similar trajectory, with ETH bleeding value as institutional and retail holders alike reduced exposure.
The $390 billion outflow from crypto's total market cap compressed valuations across the board. Layer-1 protocols like Solana and Avalanche underperformed, while stablecoin reserves temporarily tightened as traders moved into fiat. Major altcoins dumped double digits, with smaller-cap tokens taking the brunt of the selling pressure.
This marked the steepest weekly drawdown since FTX imploded in November 2022, a period that saw a $200 billion wash out of the crypto market. The parallel is stark. Both episodes featured sudden, sustained selling pressure, though the current catalyst stems from macro conditions rather than contagion from a single platform failure.
Grayscale's bitcoin sale compounded the pain. The asset manager's liquidation flooded the market with institutional BTC, adding sell pressure precisely when prices weakened. Traders immediately sensed weakness and piled on, triggering cascading liquidations on leverage.
Recovery hinges on macro stabilization. If Fed rhetoric cools or inflation data improves, risk appetite typically returns to crypto. For now, the market remains in bear mode, with many traders covering shorts at higher levels rather than adding longs. Support levels held tenuously, but conviction remains fragile.
The weekly close determines whether this reverses into a bear trap or extends lower. Until macro winds shift, crypto remains vulnerable to further capitulation.