Cryptocurrencies fell sharply on Friday as investors pulled back from risk assets. Bitcoin and ether dropped to multi-month lows, pressured by concerns over high tech valuations and fading expectations of near-term Federal Reserve rate cuts.
Bitcoin, the largest cryptocurrency, slipped 2.1% and broke below $86,000. It hit a seven-month low of $85,350.75 during Asian trading. Ether also declined more than 2%, touching a four-month low at $2,777.39.
Both major tokens were on track for weekly losses of about 8%.
Crypto assets often serve as a gauge of market risk sentiment. Their steep decline highlights how fragile investor confidence has become. AI-related stocks have tumbled in recent days, and overall market volatility has risen.
“If this is a signal about broader risk appetite, conditions could turn very ugly,” said IG analyst Tony Sycamore, commenting on bitcoin’s slide.
CoinGecko data shows that roughly $1.2 trillion in total crypto market value has been erased over the past six weeks.
Hong Kong-listed spot bitcoin ETFs from China AMC, Harvest, and Bosera also dropped close to 7% on Friday.
A Steep Reversal for Bitcoin
Bitcoin’s downturn comes after a strong rally earlier this year. The token hit a record high above $120,000 in October, supported by improving global regulatory attitudes toward digital assets.
However, analysts note that the market is still dealing with the aftermath of last month’s historic crash. That event triggered more than $19 billion in leveraged liquidations as panic selling and thin liquidity caused extreme price swings.
“The market feels dislocated, fractured, and somewhat broken since that selloff,” Sycamore said.
Bitcoin has now erased all of its year-to-date gains and is down 8% for the year. Ether has lost nearly 16%.
The broader selloff has also weighed on crypto-linked companies. Several public firms increased their digital asset holdings this year, hoping to benefit from rising prices. Their shares have now come under pressure.
Strategy, once seen as a leader in corporate bitcoin adoption, has dropped 11% this week and sits at one-year lows. Japanese firm Metaplanet has plunged about 80% from its June peak.
CryptoQuant reported on Wednesday that current market conditions are the “most bearish” seen since the bull cycle began in January 2023. The firm added that most of the cycle’s demand wave has likely already passed.
