Bitcoin and ether are on track for their worst weekly performance since the collapse of FTX in November 2022. The crypto market has lost $390 billion in a matter of days, shaking confidence among institutional and retail investors alike. The scale of the decline is reminiscent of the Terra collapse in May 2022, though the current context is unique due to the involvement of key institutional players.
The Signal
The week began with Strategy's bitcoin sale and ended with one of the largest crypto market drawdowns in years. The sell-off has been indiscriminate: both bitcoin and ether have suffered double-digit percentage losses, dragging the entire ecosystem down with them. Bitcoin fell below $60,000 for the first time in months, while ether lost the $3,000 support level, levels not seen since early 2024.
This sharp move echoes the events of June 2022, when the collapse of Three Arrows Capital triggered a cascade of liquidations. However, the context is different: Strategy's sale, a key institutional player, suggests even the most committed holders are reducing exposure. Strategy sold approximately 50,000 BTC this week, according to company data, representing a significant fraction of its total holdings. The market is now questioning whether this is the start of a deeper correction or a buying opportunity. Implied volatility in options has surged, with the crypto VIX reaching levels of 120, similar to the peaks of 2022.
