On Thursday, the cryptocurrency market experienced a large-scale sell-off, which quickly spilled over into related stock sectors. Cryptocurrency concept stocks weakened significantly, with Hut 8 (HUT) and Strategy (MSTR) plummeting over 11%, CleanSpark (CLSK) and MARA Holdings (MARA) dropping more than 10%, Coinbase Global (COIN) falling over 8%, and Circle (CRCL) also declining over 5%.
This turmoil directly stems from the intense volatility in cryptocurrencies themselves. After plunging nearly 10%, Bitcoin’s price broke below the $68,000 mark. Since hitting a historical high of around $126,000 in October last year, it has accumulated a decline of over 40%. Meanwhile, Ethereum’s price also plunged more than 9%, falling below $2,000. Data from the market prediction platform Polymarket shows that the probability of Bitcoin dropping below $65,000 within the year is as high as 82%, while the probability of falling below $55,000 has also risen to about 60%.
Market panic is linked to remarks by U.S. Treasury Secretary Scott Bessent, who hinted that the U.S. government would not bail out cryptocurrencies. This is seen as the trigger for the sell-off. Subsequently, renowned investor Michael Burry issued a warning, stating that Bitcoin’s continued price decline could “trigger a death spiral, leading to a massive collapse in value,” further intensifying selling pressure.
Bitcoin’s volatility has surged to astonishing levels in a short period. Over the past 24 hours, its price once touched a high of $73,162 before plummeting to a low of $60,074, with a maximum intraday drop of 17.9%. Although the price slightly rebounded to $61,352 on Friday morning, it still fell 13.8% compared to the same time the previous day.
Regarding the reasons for this plunge, Zerocap analyst Emir Ibrahim pointed out that it reflects more of a violent unwinding of market leverage rather than a fundamental deterioration in market fundamentals. Due to thin order book liquidity and excessive market positions, a wave of forced liquidations swept the market, temporarily pushing Bitcoin’s price to around $63,000. This essentially represented a concentrated reset of tens of billions of dollars in leveraged positions. Ibrahim emphasized that such selling pressure is not unique to the cryptocurrency market, as risk assets are currently facing widespread capital outflows. The Nasdaq Composite Index closed down 1.6% overnight, accumulating a decline of 4.5% since Monday, with technology stocks leading the losses, confirming this trend.
Joel Kruger, a market strategist at LMAX Group, noted that Bitcoin’s sharp decline has severely dampened market sentiment across the entire cryptocurrency space. Despite the intense market volatility, some characteristics of capitulation-style selling have emerged, such as severely oversold daily technical indicators and extremely low levels in market fear and greed indices.
