Bitcoin dropped to about $58,000, its lowest level of the current cycle, while Ether hit a roughly 13-month low as a crypto selloff widened into global equities, raising concerns that digital assets may be flashing an early warning of deeper pressure across risk markets.
Bitwise said in its report, “The Canary in the Macro Coal Mine: Bitcoin and the Latest Risk-Off in Stocks,” that the latest downturn has widened beyond crypto, with U.S. equities selling off sharply and South Korea’s KOSPI triggering a circuit breaker as investors reassessed the outlook for interest rates.
The report said total digital asset market capitalization fell by about $410 billion over the week, making it one of the sharpest stress events of the current cycle, while Bitcoin dropped 14.05 percent, Ether lost 15.86 percent and the top 20 digital assets declined 16.82 percent.
Crypto weakness spreads into equities
Bitwise said the latest selloff showed that pressure is no longer limited to digital assets, with traditional risk assets beginning to weaken after a long run of strong performance in crowded equity trades.
U.S. stocks sold off sharply late last week, with the Nasdaq falling 4.7 percent on Friday. The pressure continued into Asia, where South Korea’s KOSPI dropped about 8 percent in early Monday trading and triggered a circuit breaker.
Bitwise said the weakness was concentrated in the artificial intelligence-linked equity trade, with Samsung Electronics and SK Hynix each falling around 10 percent.
A stronger-than-expected U.S. jobs report added to the pressure, as non-farm payrolls rose by 172,000, nearly double the expected 85,000, leading investors to price in a higher chance of Federal Reserve rate hikes rather than cuts.
That shift put renewed pressure on richly valued assets, particularly technology and growth stocks whose valuations are more sensitive to higher discount rates.
Bitcoin flashes a macro warning
Bitwise described Bitcoin as a “canary in the macro coal mine,” arguing that the asset often reacts faster than traditional markets as it trades continuously and is highly sensitive to liquidity conditions.
The firm said Bitcoin has historically moved ahead of broader equity-market corrections by at least a couple of months. If that pattern holds, Bitwise said the latest crypto downturn could point to further downside for stocks, even as Bitcoin may be relatively better positioned after already absorbing much of its correction.
The report also pointed to strain in parts of the credit market, including private credit and leveraged loans, saying those pressures and continued investor outflows suggest liquidity is being pulled from the financial system.
Geopolitical risks also added to the pressure, with Bitwise citing renewed Middle East tensions and continued disruption to maritime traffic through the Strait of Hormuz, keeping markets exposed to possible shocks in energy prices, inflation, bond yields and equities.
Fear deepens across crypto markets
Sentiment worsened as prices fell, with Bitwise saying its Cryptoasset Sentiment Index triggered a tactical contrarian buying signal on June 3 after reaching its most bearish level since the February 5 market capitulation.
CME Bitcoin commercial net positioning fell to around negative 12.7 percent of open interest, which Bitwise said reflected a very bearish near-term outlook. Performance dispersion also declined as most altcoins moved closely with Bitcoin, a pattern the firm said has historically been linked to weakening risk appetite.
Among the top 10 cryptoassets, UNUS SED LEO, TRON and XRP were the relative outperformers, though all remained negative for the week.
Fund outflows add to pressure
In addition to the market selloff, crypto investment products saw heavy withdrawals, with Bitwise saying global crypto exchange-traded products recorded net outflows of about $1.82 billion last week after losing roughly $1.74 billion the previous week.
Bitcoin products accounted for most of the withdrawals, with global Bitcoin ETPs losing about $1.66 billion and U.S. spot Bitcoin ETFs posting around $1.76 billion in net outflows, led by the iShares Bitcoin Trust’s roughly $1.34 billion in withdrawals.
Ethereum products also weakened, with global Ethereum ETPs recording $136.2 million in net outflows. U.S. spot Ethereum ETFs lost about $175.9 million in aggregate, while altcoin and thematic crypto products saw smaller withdrawals.
On-chain stress points to capitulation
Bitwise said on-chain data showed investor stress at the highest level of the cycle, with about $920 billion in invested capital now held at a loss, equal to roughly 85 percent of all invested value.
From a supply perspective, 52 percent of coins are now underwater, meaning more Bitcoin supply is held at a loss than in profit. Bitwise said similar conditions have historically been associated with the deepest phases of bear markets.
Realized losses also surged, peaking at $1.34 billion. That matched the scale of the November 2025 capitulation, though it remained below the February 5 event, when realized losses reached $2.48 billion.
The report said most loss-taking came from investors who bought over the past year, while more seasoned long-term holders remained comparatively resilient.
At the same time, Bitwise said accumulation has increased between $59,000 and $66,000, suggesting some investors are beginning to step in at lower prices.
Leverage reset leaves market fragile
Derivatives markets showed a sharp reset in leveraged positions, with Bitwise saying total futures liquidations rose to about $7.15 billion last week from $2.30 billion a week earlier, marking the highest weekly liquidation event since early February.
Long liquidations accounted for $5.80 billion of the total, as Bitcoin’s break below key support levels forced leveraged positions out of the market and accelerated selling pressure.
Despite the damage, Bitwise said valuation conditions are moving into zones historically linked to late-stage bear-market formation. Bitcoin’s 200-week moving average stands near $61,800, while its realized price is around $53,600, leaving that range as a key area to watch if downside pressure continues.
