Crypto carnage! Bitcoin falls below $60,000, Ethereum plunges over 10%, Strategy targeted by short-sellers

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Bitcoin suffered a major blow this week, falling to its lowest level in more than six months under multiple bearish factors, clearly shaking confidence in the crypto market.

On Friday, Bitcoin touched a low of $59,099.25, the lowest since October 2024, with a daily decline of 3.4%, closing at $61,514.90, and a weekly cumulative drop of 16%.

The trigger for this decline was Michael Saylor's Strategy company selling part of its Bitcoin holdings, causing hundreds of millions of forced liquidations, and then stronger-than-expected May non-farm payrolls pushed U.S. treasury yields higher, further suppressing risk assets.

Strategy shares closed down 6.9% that day, with a weekly decline of 24%, the worst weekly performance since November 2022. Meanwhile, short trading against Strategy in the options market surged sharply, and the ETF (WNTR) that shorts the company’s stock has risen 30% since May 11.

Multiple Bearish Factors, the Decline Expands

This round of Bitcoin's decline is not caused by a single factor. Charles-Henry Monchau, Chief Investment Officer at Syz Group, told CNBC that Strategy's selloff and "hot money chasing other assets" squeezed the market jointly driving this week's drop.

"Speculative funds are betting heavily on AI stocks and memory chips, especially in the Korean market. At the same time, the upcoming super IPOs are expected to attract retail investors' funds into new stocks."

The legislative outlook for the crypto market structure bill "Clarity Act" remains bleak — as Congress reprioritizes legislation and lawmakers remain divided on key clauses, this bill, seen as a catalyst for a new round of Bitcoin rallies, is increasingly out of reach.

At the current level, Bitcoin has fallen more than half from its all-time high of about $126,000 set in October 2025.

Dual Narratives Collapse, Divergence from Stock Market

Bitcoin's core narratives of "digital gold" and "high-beta tech stock" are both under pressure. While uncertainty in Iran continues to suppress Bitcoin, U.S. stocks keep hitting record highs, with the divergence in their movements causing confusion in the market.

Rajiv Sawhney, Head of International Portfolio Management at Wave Digital Assets, told CNBC:

"Just a month ago, the 30-day Pearson correlation coefficient between Bitcoin, Nasdaq, and S&P 500 was almost perfectly positive, but in the past few weeks this relationship has collapsed sharply. Global stock markets, especially tech stocks, keep reaching new highs, but Bitcoin has failed to follow suit."

As for Bitcoin ETFs, Thursday saw about $3 million in net inflows, ending a stretch of 13 consecutive trading days of net outflows — the previous streak set an all-time record. But total assets have shrunk from $107.8 billion on May 14 to $80.4 billion.

Despite the gloomy market sentiment, some voices are speaking out against the trend. Strive CEO Matt Cole said on Friday that Bitcoin’s fundamentals "have never been this strong." He pointed out this is the fifth time Bitcoin has touched the 200-week moving average, "the first four times were perfect buying opportunities, and I believe this time will be no exception."

Short Sellers Hunt Strategy, STRC Credit Damaged

In the options market, bearish trading targeting Strategy (MSTR) surged sharply on Friday.

The volume of put options traded was more than twice that of call options on the day, and the size of put options purchased was over three times that of call options, with trading volume about three times the daily average for the past month. Of about $335 million in options premiums that day, $250 million was related to puts.

Some of the largest put option purchases came from YieldMax Short MSTR Option Strategy ETF (WNTR), which shorts Strategy stock for profit by selling put spread combos.

Strategy's floating rate preferred stock STRC was also under pressure. On Thursday, it closed down 3.6% at $92, touching the lowest price since last November.

David Dziekanski, CEO of Quantify Funds, remarked that Saylor previously claimed STRC was an alternative to selling Bitcoin, but then used the cash that was supposed to be retained to repurchase bonds and ultimately sold Bitcoin.

"This has significantly increased the risk premium the market assigns to Michael Saylor. STRC now needs to offer significantly higher yields to return to par value."

The continued rise in U.S. treasury yields is also adding extra pressure. After Friday's non-farm payroll release, the CME FedWatch tool shows the probability of a rate hike this year rising above 40%, and historically, rate hike cycles have often suppressed crypto assets significantly, with direct impact on credit instruments like STRC.

Risk Warning and DisclaimerThe market entails risks; investment must be prudent. This article does not constitute personal investment advice, nor does it take into account individual users' specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article suit their own circumstances. Investing based on this, responsibility lies with the reader. ```