Digital currencies took a severe beating on Friday as investors dumped risk assets across the board. Bitcoin crashed through the $86,000 barrier, while Ethereum tumbled alongside broader market turmoil centered on bloated tech valuations and diminishing expectations for Federal Reserve rate cuts.
The world’s premier cryptocurrency dropped 2.1% during Asian trading hours, bottoming out at $85,350.75 — its weakest level since late summer. Ethereum mirrored the decline, sinking more than 2% to $2,777.39, a four-month nadir.
Week-on-week, both digital assets faced approximately 8% losses.
Crypto traders typically use these assets to gauge overall risk appetite. The violent downturn exposes the market’s fragile psychology as artificial intelligence stocks crater and volatility measures surge.
“If it’s telling a story about risk sentiment as a whole, then things could start to get really, really ugly, and that’s the concern now,” said Tony Sycamore, a market analyst at IG, discussing bitcoin’s descent.
The cryptocurrency sector has hemorrhaged $1.2 trillion in total market capitalization over six weeks, data from CoinGecko reveals. Hong Kong-listed spot bitcoin ETFs from China AMC, Harvest and Bosera each plummeted nearly 7% Friday.
Spectacular Reversal After Record Run
Bitcoin’s collapse arrives swiftly after an extraordinary rally that pushed the cryptocurrency past $120,000 in October — an all-time peak fueled by friendlier global regulations toward digital assets.
Market observers point to lingering trauma from last month’s historic crash, which vaporized over $19 billion through forced liquidations of leveraged positions. Panic selling combined with thin liquidity to trigger violent price swings.
“The market feels a little bit dislocated, a bit fractured, a bit broken, really, since we had that selloff,” Sycamore noted.
Bitcoin has surrendered every gain accumulated this year, now sitting 8% in the red for 2025. Ethereum has fared worse, down nearly 16%.
The rout hammered companies that stockpile cryptocurrencies on their balance sheets — a strategy that boomed earlier this year as firms capitalized on rising prices. Strategy, formerly the darling of corporate bitcoin accumulation, saw shares sink 11% this week to one-year lows. Japanese counterpart Metaplanet crashed roughly 80% from its June zenith.
“Bitcoin market conditions are the most bearish they have been since the current bull cycle started in January 2023,” digital asset research firm CryptoQuant wrote in Wednesday’s weekly report. “We are highly likely to have seen most of this cycle’s demand wave pass.”
