Crypto’s $300 Billion Wipeout Marks Harshest Selloff in Months

(Bloomberg) — Cryptocurrencies shed roughly $300 billion in value this week as a wave of leveraged bets unraveled, battering the sector’s biggest tokens and dragging market sentiment to its weakest point since early summer.

Ether, the world’s second-largest cryptocurrency, led the rout with its steepest weekly decline since June. The token has dropped about 12%, sliding below the $4,000 mark — a level traders had widely seen as a crucial line of support. Bitcoin, the market bellwether, wasn’t spared either. It fell around 5% this week, its sharpest drop since March, leaving it hovering near the lower end of its recent trading range.

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“Once the first wave of liquidations started, algos and funding pressures turned it into a feedback loop,” said Ben Kurland, chief executive of crypto research platform DYOR. “In crypto, conviction is high but liquidity is thin — which is why moves down feel like free falls, while recoveries grind back more slowly. This was less about fundamentals collapsing and more about the system cleansing excess risk.”Bloomberg

The downturn accelerated as billions of dollars in bullish bets were unwound across crypto’s perpetual futures market. More than $3 billion in long positions were liquidated across exchanges, according to data compiled by Coinglass. Some traders have cautioned that the true extent of leverage in the system remains murky, as most platforms do not disclose full liquidation data.

“Most traders found themselves off balance due to a wave of liquidations on Monday,” said Griffin Sears, global head of derivatives at FalconX. “The initial downturn was followed by defensive positioning in derivatives, with deleveraging seen in futures and large put purchasing programs continuing mid-week.”

Bitcoin and Ether edged higher on Friday after overall risk sentiment improved when a report showed a key inflation gauge grew at a slower pace last month, giving the Federal Reserve some breathing room to address labor-market cooling.Coinglass

Bitcoin and Ether exchange-traded funds listed in the US also saw significant strain, posting more than $500 million in combined net outflows on Thursday.

For now, experts say momentum is fading. “Bitcoin’s drop below $109,000 is a sign that the market is overheated and moving into a slowdown phase,” said Arthur Azizov, founder of B2 Ventures. The largest cryptocurrency dropped below that level this week for the first time since the start of September.

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Adding to the pullback this week is a slowdown in buying from from corporate buyers from the frenzied pace seen in recent months that helped to push both Bitcoin and Ether to record highs.

Purchases by publicly traded digital-asset treasuries plunged from 64,000 Bitcoin in July to 12,600 in August, and 15,500 so far in September, according to CryptoQuant. The latter marks a 76% slide from the early-summer fervor. Shares in some treasuries that once raised money via so-called PIPE deals have traded down as much as 97% below issue.

Overall, digital-asset treasuries raised more than $44 billion this year, marketed as steady buyers that would transform Bitcoin and other coins from speculative tokens into financial infrastructure. The idea was simple: corporate treasuries, pensions, and listed firms would hold Bitcoin as a balance-sheet asset, creating a demand floor.

Paul Howard, senior director at market maker Wincent said that the retreat is a “healthy correction.” With Bitcoin slipping under its 100-day moving average and the market value for digital assets back below $4 trillion, he argued there is no sign of panic. Still, he warned that near-term pressures may keep prices grinding lower, especially as digital assets track macro sentiment more closely than earlier this year.

“For the first time in 2025, I’m questioning whether we’ll even revisit all-time highs this year,” Howard said.

—With assistance from Olga Kharif and David Pan.

(Adds trader comment.)

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