Crypto’s US$300 billion wipeout marks harshest sell-off in months
Ether has dropped about 12%, sliding below the US$4,000 mark
[MUMBAI] Cryptocurrencies shed roughly US$300 billion in value this week as a wave of leveraged bets unravelled, 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 per cent, sliding below the US$4,000 mark – a level traders had widely seen as a crucial line of support. Bitcoin, the market bellwether, was not spared either. It fell around 5 per cent this week, its sharpest drop since March, leaving it hovering near the lower end of its recent trading range.
“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.”
The downturn accelerated as billions of US dollars in bullish bets were unwound across crypto’s perpetual futures market. More than US$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 (Sep 22),” 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 programmes 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 labour-market cooling.
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Bitcoin and Ether exchange-traded funds listed in the US also saw significant strain, posting more than US$500 million in combined net outflows on Thursday.
For now, experts say momentum is fading. “Bitcoin’s drop below US$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.
Adding to the pullback this week is a slowdown in buying 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 per cent slide from the early-summer fervour. Shares in some treasuries that once raised money via so-called Pipe deals have traded down as much as 97 per cent below issue.
Overall, digital-asset treasuries raised more than US$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 US$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 will even revisit all-time highs this year,” Howard said. BLOOMBERG
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