Crypto has had a turbulent week, impacting Bitcoin, alternative coins, DATs, and equities. What could happen going forward?

Main Insights

• Alternative cryptocurrencies, digital asset holding firms, and stocks tied to crypto experienced significant declines as the "fear and greed" index dropped to levels indicating intense fear.
• According to one strategist, investors in Bitcoin ETFs are currently facing losses.

The recent sharp downturn in the crypto market has unsettled not only Bitcoin holders but has also reignited concerns about the broader future of digital assets.

Bitcoin's value plunged to nearly $60,000 yesterday, marking one of its steepest one-day drops in the last ten years. Although the leading cryptocurrency has managed to recover some ground and was trading near $71,000 on Friday, the overall losses for the week remain substantial. Other digital currencies have also suffered notable declines.

Several altcoins, such as ether and solana, have each dropped by approximately 25%. In contrast, Hyperliquid's native token stood out with an 11% gain. Companies managing digital asset treasuries were hit hard: Strategy (MSTR), Bitmine Immersion Technologies (BMNR), and Twenty One Capital (XXI) all experienced double-digit percentage drops over the past week.

Why This Is Important

The rapid rise of artificial intelligence appears to be negatively impacting both software stocks and Bitcoin, suggesting that new technological trends may be making cryptocurrencies seem less relevant.

Shares of Coinbase Global (COIN), Robinhood (HOOD), and Circle (CRCL) have also fallen sharply this week, though they began to recover on Friday. Meanwhile, Gemini (GEMI), the crypto exchange founded by the Winklevoss twins, announced plans to exit international markets and lay off 200 employees as part of a major restructuring effort.

The Crypto Fear and Greed Index from CoinMarketCap, which factors in price trends, volatility, and user activity, remains stuck in the "extreme fear" zone. Recently, analysts have started drawing parallels between Bitcoin's recent struggles and the downturn in software stocks, fueling new worries about the digital asset sector.

Jonathan Krinsky, chief market technician at BTIG, noted on CNBC that Bitcoin has generally moved in tandem with major asset classes like the tech-heavy Nasdaq 100, but has recently been closely tracking software stocks.

Krinsky also commented that the $60,000 mark served as a solid support level for trading. He added, "For a meaningful rebound, Bitcoin needs to climb back above $73,000, which was the critical breakdown point."

Over the past three days, Bitcoin ETFs have seen net outflows totaling about $1.25 billion, with $434 million withdrawn just yesterday, according to Farside Investors. However, Bloomberg analyst Eric Balchunas noted on social media that over 90% of assets in these funds remain intact, indicating that most investors have not sold.